Demolish and build two or build one at the back?

[evshaun]

Hi All,

Some advise, suggestions, thoughts please.

Some background info:
We have a block which we're looking to develop on. The size of the block is 735 sq, measurements approx are 15.2 m wide * 49 m long. There is an easement out the back 1m from back fence. Currently there is a house on the block which we're renting out. The house is 1950s weatherboard, standard post war house, 2br, 1bath + study. There was a small extension/sunroom at the back. It occupies approx 20m front of the block. The kitchen is pretty new and won't need any work done. Very livable as it is.

We can definitely fit two dwellings on the block, one of which needs to be 3br+ study and double garage.

The original thought would be to live in the front house while we're building at the back (once we're ready to build).

However, we're not sure if this is the best idea. We're thinking that if we build two on the block, each with their own driveway it would be better in a capital gains perspective in the long run. If we build at the back, we will need to add a single garage behind the front house.

Currently, the house is rented out at $375 per week, if we build, 3br * 2 bath, we would expect rents to be in around $500, not great considering the additional build cost.

Pros and Cons of Building one:
- Cost less
- Shared Driveway
- Can live in one as PPOR and build at back.
- Garage required at the back for front house
- Approx $30,000 to renovate front house (Garage, Rewire, Bathroom reno)
- More $ in maintenance for front house in future (re-paint, replacing old weatherboards, roofing ...??, wear and tear)

Pros and Cons of Building two:
- More up front costs, may have to sell one of our IPs to fund the build (not a great time to sell)
- No shared driveway, no common property.
- Can claim depreciation.

Our strategy is to build and hold. My main concern with keeping the front house is the amount of maintenance required in the future. It may be the cost of maintaining the old house in 5 - 10 years would be on par with the cost of demolishing and building from scratch.

This is our first go at building and subdivision, so any thoughts would be appreciated.

 

[Felixter]

What are your local council rules?

1. Do they allow a dual occ on 735sqm?
2. Do they allow a torrens title sub div on 735sqm, or just a strata sub div?
3. If you do a side bt side, is 7.6m frontage enough to do a torrens title sub div?
4. Do the council allow you to battle axe blocks in your area?
5. Would the council prefer a side by side, or a battle axe. You can go to your local council and book an appointment with a planner and they will tell you generally what they want to see done.

Pros for back/front
- Save on rent whilst building
- Construction cost will be a lot cheaper (you don't get a big discount for building 2)
- No common walls

Cons for back/front
- One house will not have street frontage.
- The other house will have a driveway down the side of their house
- Neighbours are more likely to oppose your DA because a new house will be erected right next to their back yard and will most likely look straight into their back yard
- The house at the front is still an old sh**dump

Pros for side by side
- Both houses are new. Maximum growth, maximum rent
- Both houses have street frontage

Cons for side by side
- Costs more because you are building more
- will cost an extra $15k to rent whilst you build


I always prefer side by side. A built a side by side. Live in one, rent the other out. Can't hear a thing through the walls. IMO much better than either living at the back or having people and cars walk or drive by my windows as they please.

 

[devank]

7.6 frontage? I wonder what kind of house you can build.
You will have to leave at least 1 meter as side setbacks (most likely more). That will leave max 5.6m! That is about the size as a double garage without any eves!

 

[sanj]

7.6 frontage? I wonder what kind of house you can build.
You will have to leave at least 1 meter as side setbacks (most likely more). That will leave max 5.6m! That is about the size as a double garage without any eves!

im currently building 2 homes in highgate which is 2km out of perth cbd

each has a 6m frontage so it can certainly be done but realistically you would want it to be in an inner type area as they also cost more to build

re the question though, i always try to retain the house if possible as it is usually more profitable to do so. ultimately do the numbers on both options and chose the one which youre comfortable with

retaining the house is also less risky as youve got more options.

eg if you cant get finance to build on the rear lot you can always flog it off and you still have the front home to rent out/live in/sell off

i

 

[evshaun]

What are your local council rules?

1. Do they allow a dual occ on 735sqm?
2. Do they allow a torrens title sub div on 735sqm, or just a strata sub div?
3. If you do a side bt side, is 7.6m frontage enough to do a torrens title sub div?
4. Do the council allow you to battle axe blocks in your area?
5. Would the council prefer a side by side, or a battle axe.

1. Dual occ should not be a problem, there are multiple on our street and heaps in the planning phases. A block two doors down is in the process of being subdivided, and next door is a subdivide property, though the later is a corner block, so different ball game.
2. Not sure about the torrens title, we were only thinking strata, but I will investigate. If we build two and there are no common areas, then could we go for torrens? or is this dependant on council?
3. Possibility of side by side will be very slim as if we build 3br + study, council will want minimum of 2 carports/garage per side. The block will not be wide enough. The subdivided blocks in our area are generally battle axe blocks.

Thanks sanj, you're right, from a risk perspective it would be far better for us to build one, and that's probably going to be one of our major deciding factors.

 

[Felixter]

7.6 frontage? I wonder what kind of house you can build.
You will have to leave at least 1 meter as side setbacks (most likely more). That will leave max 5.6m! That is about the size as a double garage without any eves!

Tonnes of duplexes in Sydney with 7.6m frontage. Actually in the Brighton Le Sands/Ramsgate area there are lot's that are 6m (most blocks in that area are 12m).

I'm sitting right now in a duplex half that is 7.62m and it's a large duplex. It's 6m wide in most parts and in other parts it's 4.5m.

* remember a side by side will have a common wall down the middle. A standard 15.24 block with a required boundary setback of 1.5m equals a 6m wide duplex half. Plenty.

 

[Felixter]

2. Not sure about the torrens title, we were only thinking strata, but I will investigate. If we build two and there are no common areas, then could we go for torrens? or is this dependant on council?

Depends on council first and foremost. They will have a rule stipulating the land area and frontage needed to be able to do a Torrens title sub div. If you are eligible I'd suggest doing it because your resale value will be a bit higher.

3. Possibility of side by side will be very slim as if we build 3br + study, council will want minimum of 2 carports/garage per side. The block will not be wide enough.

You need to check that. It's very rare that I see a duplex half with a DLUG. I'm confident you would be able to do a single each side.

The subdivided blocks in our area are generally battle axe blocks.

Just make sure the council are still cool with it. You just book a pre-DA appointment with a planner and ask them.

Thanks sanj, you're right, from a risk perspective it would be far better for us to build one, and that's probably going to be one of our major deciding factors.

Sounds like a battle axe will end up more feasible.

 

[evshaun]

Sounds like a battle axe will end up more feasible.

Felixter,
Working in the IT industry, I see lots of clients compromise on their projects due to cost restrictions, but end up paying more when their system doesn't meet their expectations.

I don't want to make the same mistake with this development, but in saying that, a compromised project that makes it over the line is probably better than an unfinished project. And considering we're new to this development
game the less risk the better.

Looks like I need to talk to the town planner soon. Thanks for your ideas.

Who knows, as we plan to keep both properties, we still have the option to rebuild the front house later down the track.

 

[devank]

Currently, the house is rented out at $375 per week, if we build, 3br * 2 bath, we would expect rents to be in around $500

Did you do the numbers?
Are you sure the value of new 2 dwellings is > Existing value + building cost?

3. Possibility of side by side will be very slim as if we build 3br + study, council will want minimum of 2 carports/garage per side. The block will not be wide enough.

What if you build back to back garage? Or a lock up garage and a car port infront? At least the whole common wall will be the garage.

Working in the IT industry, I see lots of clients compromise on their projects due to cost restrictions, but end up paying more when their system doesn't meet their expectations.

Well... I'm not sure if you can use the same anology here