First Time Subdividing

[wrexter]

Hi All,

My wife and i have no subdivision experience but we are about to embark on our first subdivision (i can hear the scream!).

We are actually assisting my mother subdivide her property in Riverton in order to then sell the existing house, build on the rear battleaxe lot.

The ultimate goal is to pay off her debt and leave her with a brand new house with little to no maintenance (existing house is a 1960's house). At the same time we will be gaining experience in subdivisions for our own future investments. WIN/WIN right?

So i have run some numbers and i think it looks feasible, we are not 100% on the tax side so if anyone can assist on that side, most appreciated.

House is 867 sqm R17.5/R25

From my understanding this would be a green title subdivision?

Property layout

As you can see the shape will make it slightly challenging to fit a 3x2 on the back but after speaking to a rep from a building company, they are confident of designing a single storey house to fit.

Current debt owing on house - $192K
Subdivision costs - $60k

• remove shed and detached garage
  Application Fees
  Services connections
  Clear out block
  Additional paving & Fencing

Build house (3x2) and finish off - $250k
Propose Sale of front property after subdivision - $500k
Agent fees for sale @ 2% - $10k

Total - $12k out of pocket.

(Please correct me if not correct on costs or if missing anything).

Our first step is

- Approach surveyors to carry out survey on property
- Consult a builder about what is possible on battleaxe block and come up with a layout to suit.
- Submit application to WAPC
- Go through conditions and tick off
- Apply for clearance of conditions
- Lodge endorsed plans with landgate for creation of titles.


Thanks for any advice.

 

[thatbum]

What are the requirements to qualify for the R25 coding there in riverton?

 

[Colin Rice]

Consider borrowing 236k for the build and offsetting with 236k profit from sale of original property.

This will leave your Mum with with 236k cash in the offset and no repayments required on the mortgage.

*Subject to serviceability.

 

[Aaron_C]

Need to add the * after the second sentence

 

[westminster]

What are the requirements to qualify for the R25 coding there in riverton?

+1 on this. The R25 requirement might be double storey etc.

I would also budget for putting a carport in for front house and fencing off the front yard to make their garden/courtyard area. Some councils will impose things like this.

Overall I think it's a good idea and doable. I think your estimates have some fat in them - it's probably closer to 200k for a 3 x 2 with nice fittings but there is a huge variance with quotes.

 

[wrexter]

What are the requirements to qualify for the R25 coding there in riverton?

I just called the city of canning and there are no special requirements to qualify for R25 coding, I will have to get that on writing but good to know.

Thanks for the tip

 

[wrexter]

Consider borrowing 236k for the build and offsetting with 236k profit from sale of original property.

This will leave your Mum with with 236k cash in the offset and no repayments required on the mortgage.

*Subject to serviceability.

Not quite sure I understand what the benefits are here

Would it not be appropriate to take profit
From sale and put it into a bank account accruing interest while paying construction payments on new build?

 

[wrexter]

+1 on this. The R25 requirement might be double storey etc.

I would also budget for putting a carport in for front house and fencing off the front yard to make their garden/courtyard area. Some councils will impose things like this.

Overall I think it's a good idea and doable. I think your estimates have some fat in them - it's probably closer to 200k for a 3 x 2 with nice fittings but there is a huge variance with quotes.

Thanks Myf,

I don't think there is a carport requirement for subdivisions in Riverton, a paced driveway is sufficient (spoke to a real estate rep with subdivision experience in Riverton).

I like having some fat in build cost as going through a build of our own, I know the costs involved after handover can be numerous

- blinds
- flooring
- landscaping
- etc

We have built with New generation before with good results so we will be approaching them, but we will most likely also engage another builder for a quote (celebrations etc)

 

[westminster]

Have a talk with local REAs and see how much value there is gained with putting a carport (single or double) on the front house.

I perceive that it would be easier to sell and would value more BUT it's possible that it doesn't. My readings on here indicate that it's good to get back at least $1.30 for every $1 spent when you are talking renos/improvements.

eg. Spent $10k improving front house to get a valuation increase of at least $13k. If you spend $10k improving for $5k value increase then it's a no go *

* That rule of thumb doesn't take into consideration
- speed to sell (sometimes it's worth it to get a good quick sale)
- emotional buyers (those that fall in love with it and HAVE to have it and offer over valuation and so the rational sums don't mean anything!)
- tanking/booming prices

 

[westminster]

Thanks Myf,

I don't think there is a carport requirement for subdivisions in Riverton, a paced driveway is sufficient (spoke to a real estate rep with subdivision experience in Riverton).

I like having some fat in build cost as going through a build of our own, I know the costs involved after handover can be numerous

- blinds
- flooring
- landscaping
- etc

We have built with New generation before with good results so we will be approaching them, but we will most likely also engage another builder for a quote (celebrations etc)

I meant to say that I love you having some fat in it. It's all about contingency and if the sums work with fat in it then it's awesome

Especially seeing as it will be your Mum's PPOR so she is likely to be more fussy than an IP

 

[thatbum]

I just called the city of canning and there are no special requirements to qualify for R25 coding, I will have to get that on writing but good to know.

Thanks for the tip

Ha, there has to be some sort of requirement or it there wouldn't be a split coding! But it does look like its a pretty easy threshold for Canning:

"Where a site has dual coding the lower code shall prevail as the
maximum permissible residential density for any land within the
Residential zones unless ?

(a) reticulated sewerage is or becomes available to any
land within the zone or subject to the provisions of the
Government Sewerage Policy; and

(b) for development of more than two dwellings the
minimum development site frontage is 25 metres
unless otherwise indicated on the Scheme Map of a
gazetted Town Planning Development Scheme."

 

[Colin Rice]

Need to add the * after the second sentence

Thanks. The joys of late night posting

 

[impala67]

Hi Wrexter, Please update SS when you pass the first step. Thanks

 

[wrexter]

Hi Wrexter, Please update SS when you pass the first step. Thanks

Sorry but what is SS?

 

[impala67]

Sorry but what is SS?

Somersoft (forum)

 

[wrexter]

Somersoft (forum)

Oops, haha, sure will

 

[gooram]

Also, to save a few grand, consider going strata title instead of green title. You can add an 'exclusive use' clause to the strata plan for common property (which would only be the driveway)

 

[Jake D]

Also, to save a few grand, consider going strata title instead of green title. You can add an 'exclusive use' clause to the strata plan for common property (which would only be the driveway)

I thought that even in Strata, the driveway doesn't have to be common property.

 

[perthguy]

I thought that even in Strata, the driveway doesn't have to be common property.

There is a survey strata plan or strata plan. As far as I know, either plan can be approved with no common property or with common property (as long as the plan complies with requirements of course).

 

[wrexter]

Also, to save a few grand, consider going strata title instead of green title. You can add an 'exclusive use' clause to the strata plan for common property (which would only be the driveway)

Hi gooram,

Can you please explain why that would be beneficial, this is all new to me.

Thanks