My Development - What would you do?

[Hulkster]

I’m interested in everyone’s opinion or suggestion as to what I should do with a property I own (purchased for 120k). I’ve added a rough schematic so you can see what the land content looks like.

As you can see there is a lot of vacant land. The land as it stands is sufficient for four units/townhouses to be built on strata title. They can’t be torrens due to the current width of the driveway. The house itself would probably sell for around 195k if I split the vacant land onto a separate title.

So my conundrum is this – do I look at building the four at 4x160k to build and around 220-230k sell, and sell off the house as it stands

Or

Do I demolish the house and make building far easier as far as the site and council is concerned and build 5 or possibly 6 units at 160k

I’m not too keen on carrying all the extra debt on top of my other R/E borrowings but the site is in a good location.

 

[FreeFall]

* Wow ! *
Drawing using xcel...thats different, and what an odd shaped block !

If you can afford to demolish and build 5 or 6 then ( preferably 6 !) this would have to be the better option.
The existing ( old ) house will detract from the new ones in appearance and may affect their value as well as their popularity.

Keep in mind that the old house has the street frontage and is what a buyer or tenant will see from the street.

On the other hand if finances are tight, then it may be better to be pragmatic and retain the existing house and just add the additional four dwellings.
It may be possible to have the existing one rented while you complete the development to assis with your cashflow.

One other option would be to retain the existing house initially with the proviso that you demolish and replace it once you have completed the building of the other four.
Then, if you have planned it correctly you can build the two additional dwellings to make up the six in total thus maximising your return on the property. ie...do a two staged development to minimise the cashflow impact.

You can also then reassure the purchasers of the initial four strata homes that the old house will be replaced once the first four are sold/settled, etc.

Seems to be that you have got the land at a good price and the possibilities are many.

I am sure you will do well with it and good luck !

FF

 

[Merovingian]

You could have a few units/townhouses backing on the 43.25 metre boundary, facing the main road, with driving access along the 38 metre boundary, where there is a small car park where the existing house is. The carpark should be able to hold enough cars for all of the tenants in the 4 to 6 units.

As suggested above, staggering the development times for a few of the units may minimise cash flow problems. i.e. you could build 2 or 3 units in the top-left corner, and then rent them out, (as well as keeping the existing house rented), and then build the rest, rent them out, and then demolish the existing house and replace it with sheltered car spaces.

Also, having 2-storey townhouses/units may mean that the tenants can get a view over the new car park and house on the corner, (the area on the bottom right), to perhaps maximise rent...

Just a thought — this may not be plausible, given the information available...

 

[Apocalypse]

What is the laneway? Pedestrian traffic only? Where does it go? Could you use it for vehicular access to the boundary adjacent it?

What's on the corner block? Can you buy that one too? Or part of it?

 

[Hulkster]

The units/townhouses are 3 bed 2 bath with garages as they are far more popular in the area.

I don't have a great deal of interest in retaining any of them at this stage.

The laneway is a driveway to an internal property and they refuse to allow right of way access to the block via the laneway.

The corner block has a house on it - I could have bought it 18 months ago for around 135k but didn't - prices have gone up since then and I'm not sure that paying 180k is a good financial decision. I would buy the block next door on the otherside however - it is as wide and as deep as mine, but they aren't interested in selling at present.

Thanks for replies so far.

 

[paulie]

Hi Hulkster,

It seems obvious the highest development potential of the block is to demolish the existing and go for maximum sub division of the land, using your assumed final sell prices and building costs each "unit site" has a land value in the $60 - $70K range - hence 6 X $60K = $360 not bad for a $120 purchase.

As you sound unlikely to want to (or to be able to afford to) fund the sub division & building yourself, don't. Get your development approval in place, get a building package/builder you like, and sell "off the plan" house and land packages for $5 to $15 grand less than the today's value is finished - so leave a little in it for the next owners.

Good luck

Paulie

 

[chrispy]

Developing

Hulkster

This is the same dilema I faced with our old house. Alan and I went through the figures and had decided the best for us was to renovate then subdivide as between us we could do all the manual work.

With Alan gone, I sat down with Darren Jones (a local agent) and we went through the figures, for me to develop I was paying a builder to build, supervise, etc., and all I would get back basically was what I was outlaying.

My best option was to put it up for tender, a builder then has the option of demolishing the old house and putting 3 townhouses on the land, or demolishing and subdividing the land clear across the middle, which will give both blocks court and river frontage and or the other option is for renovation and build a second house on the front of the land.

We paid 1065 pounds for the land in 1963, we built the house for $4600, we lived there for 10 years and we have had the house let for 30 years!!!

I will take the money and invest in property giving a higher return.

In the end it came down to the highest return for the money.

Don't know if that has helped.

Chris