Duplex Development

[PS10]

Hi All,

Sorry about the long winded question, though I would like to find out as much details as possible about the following scenario;

I have a PPOR which I would like to enquire about developing. I've been in this house for 5 years, and I know believe there would be value in knocking down and putting a duplex on the block.

Block is 765sqm in Revesby NSW. There is a lot of similar developments taking place in the area, and there seems to be a healthy demand for the product.

My questions are more relating to costs to develop. I know a lot comes down to quality of the finishes selected, but I'm more after cost for things like:

Architect
Surveyor
DA process
Demolition (3 bedroom home with a pool)
Construction of double brick duplex
Water/Gas/Electricity connections

On another note, as this is currently my PPOR, would one of the duplexes at completion remain CGT free, or how is this calculated. What would be the formula to work out taxes to be paid on the second duplex if sold. Is GST payable.


Anything else I have missed, which I assume would be quite a bit.

Your feedback would be greatly appreciated.

 

[mflying]

Hi All,

Sorry about the long winded question, though I would like to find out as much details as possible about the following scenario;

I have a PPOR which I would like to enquire about developing. I've been in this house for 5 years, and I know believe there would be value in knocking down and putting a duplex on the block.

Block is 765sqm in Revesby NSW. There is a lot of similar developments taking place in the area, and there seems to be a healthy demand for the product.

My questions are more relating to costs to develop. I know a lot comes down to quality of the finishes selected, but I'm more after cost for things like:

Architect
Surveyor
DA process
Demolition (3 bedroom home with a pool)
Construction of double brick duplex
Water/Gas/Electricity connections

On another note, as this is currently my PPOR, would one of the duplexes at completion remain CGT free, or how is this calculated. What would be the formula to work out taxes to be paid on the second duplex if sold. Is GST payable.


Anything else I have missed, which I assume would be quite a bit.

Your feedback would be greatly appreciated.

Architect: $5-$6K
Surveyor: $1k
DA process: it depends on what designs you/architect come up with
Demolition (3 bedroom home with a pool)
Construction of double brick duplex: depends on size
Water/Gas/Electricity connections

 

[PS10]

Thanks for the reply mflying.

Anyone have any ideas regarding demolishing and construction costs?

 

[Doovalacky]

I've listed a few costs in this thread allowed for during my duplex build.

I also spent over $1000 in materials for TV points and phone/network.
2 aircons was about 4k by the time got them installed.

No architect used took a standard project builders plan. Moved a couple walls to suit my requirements and made it a mirror image.
The common wall for the garage's was about 1k extra as well to make it meet the fire requirements.

Demolition cost will vary depending on house. ie any chance of asbestos?

 

[PS10]

Hi Doovalacky,

Thanks for the info, and referring me to your previous thread.

Yes, there is a good chance I have asbestos in my current place, and I'm sure that would make demolition cost a lot more expensive.

 

[DaveM]

What is the end value of the duplexes less the value in the CIV of the current house less total build and professional costs? You dont want to end up in negative equity at the end.

 

[PS10]

Thanks Dave.

These are the exact figures that I want to work out.

Current mortgage 465K

Proposed value of duplexes on completion in today's market is 730K each. Plenty of recent comparable sales in the area to support this valuation, for 4x3x1 double brick duplexes.

Construction Costs????
Professional Costs????

 

[PS10]

Can anyone shed some light on the CGT question?

If the Duplexes are made Torrens title, what are the tax implications of selling both assets, or holding onto one (would it remain PPOR) ?

 

[Doovalacky]

Current mortgage 465K
Proposed value of duplexes on completion in today's market is 730K each.

Well that leaves you only $265k or $132k per unit.
Even less if assume your loan is not 100% current value.

Unless your valuation of 730k is based on some really tiny dog box's I can't see that breaking even.

Perhaps a reno and facelift might be more effective. Or sell and buy a blank block,

 

[GreenMedallion]

Architect: $5-$6K
Surveyor: $1k
DA process: it depends on what designs you/architect come up with
Demolition (3 bedroom home with a pool)
Construction of double brick duplex: depends on size
Water/Gas/Electricity connections

Those costs seem optimistic to me. You might be able to get a good draftsperson/building designer for that price although an architect will charge more.

Survey fees of only 1K are also low in my opinion. I'd be budgeting at least 3K or so.

 

[PS10]

Well that leaves you only $265k or $132k per unit.
Even less if assume your loan is not 100% current value.

Unless your valuation of 730k is based on some really tiny dog box's I can't see that breaking even.

Perhaps a reno and facelift might be more effective. Or sell and buy a blank block,

Hi Doovalacky,

Not sure how you come to these figures. If I sold both duplexes for a combined total of $1.46m, minus 465K (current mortgage) would roughly work out to be a million $.
Less construction costs & professional fees, plus selling costs and any tax liabilities.
What I would like to work out is the construction costs and tax liabilities to see what would be left out of the 1 million, and to see if it would be worthwhile.

 

[PS10]

Those costs seem optimistic to me. You might be able to get a good draftsperson/building designer for that price although an architect will charge more.

Survey fees of only 1K are also low in my opinion. I'd be budgeting at least 3K or so.

Thanks for the heads-up GreenMedallion, I obviously have a bit of DD to do.

 

[Doovalacky]

I assumed your value of 730k was for both, not one 1/2 of the duplex. That does change things a bit!

 

[Shahin_Afarin]

Those costs seem optimistic to me. You might be able to get a good draftsperson/building designer for that price although an architect will charge more.

Survey fees of only 1K are also low in my opinion. I'd be budgeting at least 3K or so.

Those numbers are right. I did a survey on one of my properties at it cost $1,200. Architect fees are also correct however it is somewhat dependent on the type of design, site, council, etc.

Regards

Shahin

 

[Shahin_Afarin]

PS10 - get on the phone or meet an investor who has done a duplex. Its even better if you can get one that has done it in the area that you are looking to buy. There is a lot more to it than fees, costs, etc.

Regards

Shahin

 

[PS10]

Thanks Shahin, will do.

I understand it's not a straight forward process, and will more than likely employ a professional to project manage, though I want to arm myself with as much information as possible before engaging someone.

I would also like to learn as much as possible regarding the process. I would like to make investing in property a sucessful venture that I will continue to do in the future, even after this first development.