Is your gross realisation after CGT or before? I presume you plan to sell.
Mona Vale Townhouse Development - Update
- Thread starter MichaelW
- Start date
Hi Omega,
Before CGT. And at this stage I don't plan on selling any of them. Upon completion I'll be holding a $2.8M asset with only $1.8M of debt on it. I can rent each one out for $800pw conservatively and be cash flow neutral. By late 2009 Sydney will be starting to look like a better investment again and might be gearing up for the next property boom. The current demand/supply equation in Sydney means its just a matter of time until it booms big again, but a few things need to change before that environment is created.
I intend to hold this asset through that next boom as well as my PPOR. So, I'd be holding nigh on $4M worth of Sydney properties when the next boom kicks in and be cash flow neutral on them while I wait. In fact, once I've finished this one I'll probably extract the available equity with an LOC and look for my next Sydney development site...
Cheers,
Michael.
Sydney market
Hi Michael,
We've had an indication from our new broker (Investors Direct) that we can finance our first dual occ in the coming year, and just getting proper preliminary approval from Westpac so we can finally go shopping next month for our first development site (yeeehaaaaa!!).
Anyway, at this point in time we're planning on a goal of one dual occupancy per year, on the same basis as you: finish one, refinance to access the equity and then do the next one.
The thing I've been wondering though is when it is likely that Sydney will start to move again. I can't figure out what I think might happen. It may need interest rates to start coming down again? But then again, Brisbane and Melbourne are moving along very well with the same interest rates.
So, my question is, what factors do you think will trigger Sydney waking back up again and what timeframe are you guessing at?
By the way, how is the DA going? Are you still moving along at the Land and Environment Court, or has Pittwater finally approved it?
Hi Michael,
We've had an indication from our new broker (Investors Direct) that we can finance our first dual occ in the coming year, and just getting proper preliminary approval from Westpac so we can finally go shopping next month for our first development site (yeeehaaaaa!!).
Anyway, at this point in time we're planning on a goal of one dual occupancy per year, on the same basis as you: finish one, refinance to access the equity and then do the next one.
The thing I've been wondering though is when it is likely that Sydney will start to move again. I can't figure out what I think might happen. It may need interest rates to start coming down again? But then again, Brisbane and Melbourne are moving along very well with the same interest rates.
So, my question is, what factors do you think will trigger Sydney waking back up again and what timeframe are you guessing at?
By the way, how is the DA going? Are you still moving along at the Land and Environment Court, or has Pittwater finally approved it?
Hi Land,
Sydney is certainly looking stronger day by day. It really is just a question of the demand and supply equation tipping the scale to demand and prices rising accordingly. I can't say when this will happen, but there is a severe shortfall of housing in Sydney at the moment, so I can't see it staying subdued across the board indefinately. My thinking, if I had to guess, is 2010-ish.
My DA is set for a s. 34 on-site hearing with a commissioner on the 18th December now. Council seem to have abandoned the normal DA approval process and are now focussing on preparing for the legal action on the 18th. Buckets of fun, NOT! But that's life. We're similarly writing affidavits and waiting for council's list of contentions so that we can respond. That's due on the 13th. Its getting quite painful now, but we're still confident we'll force this one through eventually. Might not all get wrapped up on the 18th, but we'll know where we stand then and what, if anything, we need to do to meet the LEC's concerns prior to approval.
I don't recommend this as a pastime to anyone. But I see it as the reason why we will profit from this endeavour. If it was easy, everyone would be doing it. The effort we are putting in now is what will deliver us the profit in a year or two's time. But it sure is painful hard work right now, and we've only just begun on this whole endeavour.
This might well be my last Pittwater Council DA though. They are massively over-represented at the Land and Environment Court...
Cheers,
Michael.
Sydney is certainly looking stronger day by day. It really is just a question of the demand and supply equation tipping the scale to demand and prices rising accordingly. I can't say when this will happen, but there is a severe shortfall of housing in Sydney at the moment, so I can't see it staying subdued across the board indefinately. My thinking, if I had to guess, is 2010-ish.
My DA is set for a s. 34 on-site hearing with a commissioner on the 18th December now. Council seem to have abandoned the normal DA approval process and are now focussing on preparing for the legal action on the 18th. Buckets of fun, NOT! But that's life. We're similarly writing affidavits and waiting for council's list of contentions so that we can respond. That's due on the 13th. Its getting quite painful now, but we're still confident we'll force this one through eventually. Might not all get wrapped up on the 18th, but we'll know where we stand then and what, if anything, we need to do to meet the LEC's concerns prior to approval.
I don't recommend this as a pastime to anyone. But I see it as the reason why we will profit from this endeavour. If it was easy, everyone would be doing it. The effort we are putting in now is what will deliver us the profit in a year or two's time. But it sure is painful hard work right now, and we've only just begun on this whole endeavour.
This might well be my last Pittwater Council DA though. They are massively over-represented at the Land and Environment Court...
Cheers,
Michael.
i'm reading all that you're going thru and am stunned - and take my hat off.
we put our application in to council for a 4x2bed townhouse development in early october ... there were no objections and council can't find anything wrong with the plans. so much so that they've felt they had to "tweak" and have asked for a landscape design - another $900 as has to be completed by a certified landscape designer on top of the required quality surveyor report of $800 because the building cost is expected to be more than $500,000 (bugger) - but once they receive the landscape design then we're home and hosed. expecting it out late january because of the christmas/new year slowdown.
only problem is that, because i thought council would take "forever", tenants are on a 12 month lease, so we can't start building until august 08 ... in the meantime we'll be looking for block #2.
i know yours has been a hard slog because you've been pushing the envelope - but the learning process means every development after this should be a piece of cake. experience you just can't buy.
i've been enjoying this thread - but not envying you one bit.
all the best for the 18th, and here's wishing you a great christmas present.
we put our application in to council for a 4x2bed townhouse development in early october ... there were no objections and council can't find anything wrong with the plans. so much so that they've felt they had to "tweak" and have asked for a landscape design - another $900 as has to be completed by a certified landscape designer on top of the required quality surveyor report of $800 because the building cost is expected to be more than $500,000 (bugger) - but once they receive the landscape design then we're home and hosed. expecting it out late january because of the christmas/new year slowdown.
only problem is that, because i thought council would take "forever", tenants are on a 12 month lease, so we can't start building until august 08 ... in the meantime we'll be looking for block #2.
i know yours has been a hard slog because you've been pushing the envelope - but the learning process means every development after this should be a piece of cake. experience you just can't buy.
i've been enjoying this thread - but not envying you one bit.
all the best for the 18th, and here's wishing you a great christmas present.
geez Michael, i am surprised that this has gone so far down the LEC track. Sounds like Pittwater is the same at Sutherland in that they let as much as possible be approved by LEC so they can turn around to the residents and say "well, we didn't approve it!".
I would be asking the council to hold "without prejudice" talks with you now to see if you can sort everything out before 18th Dec.
Good luck!
I would be asking the council to hold "without prejudice" talks with you now to see if you can sort everything out before 18th Dec.
Good luck!
Michael,
Do you ever wonder whether purchasing several inner city or bayside properties in Melbourne or Brisbane over the last 2 years, perhaps even with the assistance of a reputable buyer agent, may have created the equity you require far quicker, simpler, easier, and with less risk?
JIT
Yep,
Definately asked that question a few times, but the answer I keep coming back to is No. I'm looking at building in about an additional $1M equity on my equity deposit of $125K. The construction loan is based on gross realisation so requires no further equity. I could have bought a $700K house elsewhere and waited for the market to do the work for me, but I doubt it would have added $1M any time soon. What's more, when done, I'll hold an asset worth $3M in an area that I think is set to boom next. So, I've timed this development to realise the capital gain once complete. I couldn't have bought a cash flow neutral asset worth $3M with only $125K down if I hadn't "paid wholesale" to use Michael Yardney's term.
This is a serious wealth accelerator for me, and passive buy and hold cannot deliver these sorts of returns. If Sydney booms following my development then the numbers look even stronger again.
Cheers,
Michael.
Update: Section 34 on site hearing today
Hi Guys,
We did it!
The section 34 meeting went really well, with all of the issues now resolved to council's satisfaction. It wasn't a "binding" section 34 meeting, so we need to go away and apply some minor modifications to tweak the details and then come back on the 17th January for the binding meeting where the commissioner stamps the plans as DA approved.
Woohoo!
There were two potential show stoppers: Over-shadowing of the adjoining property and basement parking meeting accessibility requirements. We managed to resolve both those issues pretty quickly by demonstrating that over-shadowing falls on the adjoining fence and causes no adverse impact now that we have dropped the lift access to the top floor unit, and by increasing the size of the basement carspaces.
The other two issues were around fencing and landscaping, which were more of a nuisance than show stoppers. Unfortunately, we've had to give ground on the fencing issue, but the landscaping was no big deal. For fencing, we now need to move the entire fence to be 1m in from the boundary along both street frontages, effectively costing us some 80m2 of land. What a ridiculous control! Its either that, or we drop the height of it at the boundary to not more than 1m. This is a new control, and one that is being supported by the LEC. But can you imagine how you'd react if I said you had to move your front fence 1m and just give that extra verge to council for plantings. Absolutely ridiculous! But hey, we'll concede that issue and get on with it. We don't need permission to build a 1m high fence on the boundary, so maybe we'll just do that down the track and screen it with plantings on the council strip immediately in front of it, thereby retaining all of our dirt entitlement inside that boundary.
But we're there. We haven't got our stamp yet, but that is now just a matter of following process and waiting until January 17th for the commissioner to come back from his holidays and give us our stamp!
I'm off on leave myself tomorrow for three weeks, flying up to Bundaberg to spend Christmas with Kay's parents. So I intend to chill out completely and recharge the batteries for 2008. Now it gets serious...
Cheers,
Michael.
Hi Guys,
We did it!
The section 34 meeting went really well, with all of the issues now resolved to council's satisfaction. It wasn't a "binding" section 34 meeting, so we need to go away and apply some minor modifications to tweak the details and then come back on the 17th January for the binding meeting where the commissioner stamps the plans as DA approved.
Woohoo!
There were two potential show stoppers: Over-shadowing of the adjoining property and basement parking meeting accessibility requirements. We managed to resolve both those issues pretty quickly by demonstrating that over-shadowing falls on the adjoining fence and causes no adverse impact now that we have dropped the lift access to the top floor unit, and by increasing the size of the basement carspaces.
The other two issues were around fencing and landscaping, which were more of a nuisance than show stoppers. Unfortunately, we've had to give ground on the fencing issue, but the landscaping was no big deal. For fencing, we now need to move the entire fence to be 1m in from the boundary along both street frontages, effectively costing us some 80m2 of land. What a ridiculous control! Its either that, or we drop the height of it at the boundary to not more than 1m. This is a new control, and one that is being supported by the LEC. But can you imagine how you'd react if I said you had to move your front fence 1m and just give that extra verge to council for plantings. Absolutely ridiculous! But hey, we'll concede that issue and get on with it. We don't need permission to build a 1m high fence on the boundary, so maybe we'll just do that down the track and screen it with plantings on the council strip immediately in front of it, thereby retaining all of our dirt entitlement inside that boundary.
But we're there. We haven't got our stamp yet, but that is now just a matter of following process and waiting until January 17th for the commissioner to come back from his holidays and give us our stamp!
I'm off on leave myself tomorrow for three weeks, flying up to Bundaberg to spend Christmas with Kay's parents. So I intend to chill out completely and recharge the batteries for 2008. Now it gets serious...
Cheers,
Michael.
Congrat's Micheal
I am sure your smile is from ear to ear
Some interesting new I heard the other day - a carpenter came walking into the RE office and was complaining that there was a general lack of work and that the rates were already falling. You can test the theory.
Have a good holiday
Cheers
I am sure your smile is from ear to ear
Some interesting new I heard the other day - a carpenter came walking into the RE office and was complaining that there was a general lack of work and that the rates were already falling. You can test the theory.
Have a good holiday
Cheers
