Hi all,
I Thought i would share the story of my first development. I've had a lot of help and good advise from people on SS. Hopefully i can return the favor.
The projects is nearing completion, about 4 weeks away from practical completion and getting ready to rent out.
So its our first property purchase and the project was a retain and build.
The front one is our PPOR and the back one being built is going to be a rental.
Purchase Price 418,000 (425,000 - 7,000 FHOG)
Stamp duty - Nil
Legals - 1200
Subdivison - 30,000 (includes Western Power, Watercorp, Surveyor etc)
Renovations to front house - 15,800
Construction costs - 260,000
Holding costs for construction loan - 5000
Total costs - 730,000
PPOR 470,000
IP1 530,000
Total value - 1,000,000
Total equity - 270,000
Decision to get into property -
-----------------------------------
I moved over from NZ to Perth as soon as I completed my Electrical trade, my aim was to work away in the mines to earn a good income and save for investing. I wasn't sure what sort of investment path I would take but property was the most likely as I knew more people that have had success through property than other forms of investing. I had been in the mines for about a year and with the money I already had, I managed to save up enough for a 20% deposit on the property I eventually brought.
I was lucky enough to have a workmate who was a builder and has completed several development projects. He helped get motivated and steered me down the right path (originally I was more focused on researching apartments or units to do small renos and higher yields).
Everything happened pretty quickly with the property we brought. I found a few property's that might suit but I was always away at work, and missed out on a couple. We ended up finding one in August 2012 in South Lakes, Perth. The property was a large block up for auction by the bank, mortgagee sale. The property was large enough to retain the front and build at the back.
Auction day
--------------------
It was my week off from work I got back Monday to inspect the property and the auction was that weekend. I didn't know where to start and anything about subdivisions but I got in touch with a surveyour and they told me yes it was possible and also to go speak with the local council as the planners there can help you with pretty much everything.
So before the auction finance was approved and due dilligence was done on development potential.
Auction day I was pretty nervous but with excitement at the same time. I had a max of 475k that I was prepared to pay. I had not crunched any numbers or spoken to any local agents about pricing, something I now know the importance of. There were about 5 interested parties at the auction. The agent knew I was keen, he told me 2 families were after it and the rest were investors. The auction started off at the low 300s and moved up in about 20k jumps till it got to 400. There was 1 family left that look like they were prepared to keep going. I was sitting there at the front on the phone with my workmate so he could listen in, He told me to wait till the end and then start bedding strong and fast. I jumped in at the last moment and we started going up in $1,000 dollar bids after 400k. This carried on until they were taking longer and longer to bid and I finally secured the property at 425k! It was a great feeling and I got it for a bargin of a price considering I was prepard to pay 475. It was right at the start of the Perth market heating up and I think good luck and good timing was the only reasons I got it for that price.
Subdivision Process
---------------------------
There are a couple of options when doing a strata on your property in Perth (correct me if I'm wrong) one is Built Strata which allows the build to take place the same time as the subdivision process is happening which saves a lot of time and costs. You need capital behind you to take that path which i didn't have at the time so i took the option of Survey Strata, this means applying for subdivision first and then construction takes place after. Once our property was subdivided i was able to approach the bank and get then to revalue the original house on the smaller land component and the new lot that was created.
The whole process took about 8 months but can be done in about 5-6 if you know what your doing. The Perth market was starting to pick up momentum at this stage i was lucky to get valuations of 425,000 for the front house ( less 550sqm ) and 250,000 for the new lot created. This allowed me to fund the build.
The whole subdivision process is pretty straight forward. i engaged a surveyor and they took care of most of the work and answered all of my stupid questions for me
for a basic retain and build project back in 2012/2013 it cost me approx 30,000k which included Headworks costs from Watercorp, Westernpower fees, WAPC + Council fees and contributions, and the surveyor costs.
The council have requirements like site needs to be cleared, fenced etc before titles can be issued and i was able to save money by doing a lot of this work myself, extra costs of 20,000 may have been added on if i was to pay someone to do it for me.
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I Thought i would share the story of my first development. I've had a lot of help and good advise from people on SS. Hopefully i can return the favor.
The projects is nearing completion, about 4 weeks away from practical completion and getting ready to rent out.
So its our first property purchase and the project was a retain and build.
The front one is our PPOR and the back one being built is going to be a rental.
Purchase Price 418,000 (425,000 - 7,000 FHOG)
Stamp duty - Nil
Legals - 1200
Subdivison - 30,000 (includes Western Power, Watercorp, Surveyor etc)
Renovations to front house - 15,800
Construction costs - 260,000
Holding costs for construction loan - 5000
Total costs - 730,000
PPOR 470,000
IP1 530,000
Total value - 1,000,000
Total equity - 270,000
Decision to get into property -
-----------------------------------
I moved over from NZ to Perth as soon as I completed my Electrical trade, my aim was to work away in the mines to earn a good income and save for investing. I wasn't sure what sort of investment path I would take but property was the most likely as I knew more people that have had success through property than other forms of investing. I had been in the mines for about a year and with the money I already had, I managed to save up enough for a 20% deposit on the property I eventually brought.
I was lucky enough to have a workmate who was a builder and has completed several development projects. He helped get motivated and steered me down the right path (originally I was more focused on researching apartments or units to do small renos and higher yields).
Everything happened pretty quickly with the property we brought. I found a few property's that might suit but I was always away at work, and missed out on a couple. We ended up finding one in August 2012 in South Lakes, Perth. The property was a large block up for auction by the bank, mortgagee sale. The property was large enough to retain the front and build at the back.
Auction day
--------------------
It was my week off from work I got back Monday to inspect the property and the auction was that weekend. I didn't know where to start and anything about subdivisions but I got in touch with a surveyour and they told me yes it was possible and also to go speak with the local council as the planners there can help you with pretty much everything.
So before the auction finance was approved and due dilligence was done on development potential.
Auction day I was pretty nervous but with excitement at the same time. I had a max of 475k that I was prepared to pay. I had not crunched any numbers or spoken to any local agents about pricing, something I now know the importance of. There were about 5 interested parties at the auction. The agent knew I was keen, he told me 2 families were after it and the rest were investors. The auction started off at the low 300s and moved up in about 20k jumps till it got to 400. There was 1 family left that look like they were prepared to keep going. I was sitting there at the front on the phone with my workmate so he could listen in, He told me to wait till the end and then start bedding strong and fast. I jumped in at the last moment and we started going up in $1,000 dollar bids after 400k. This carried on until they were taking longer and longer to bid and I finally secured the property at 425k! It was a great feeling and I got it for a bargin of a price considering I was prepard to pay 475. It was right at the start of the Perth market heating up and I think good luck and good timing was the only reasons I got it for that price.
Subdivision Process
---------------------------
There are a couple of options when doing a strata on your property in Perth (correct me if I'm wrong) one is Built Strata which allows the build to take place the same time as the subdivision process is happening which saves a lot of time and costs. You need capital behind you to take that path which i didn't have at the time so i took the option of Survey Strata, this means applying for subdivision first and then construction takes place after. Once our property was subdivided i was able to approach the bank and get then to revalue the original house on the smaller land component and the new lot that was created.
The whole process took about 8 months but can be done in about 5-6 if you know what your doing. The Perth market was starting to pick up momentum at this stage i was lucky to get valuations of 425,000 for the front house ( less 550sqm ) and 250,000 for the new lot created. This allowed me to fund the build.
The whole subdivision process is pretty straight forward. i engaged a surveyor and they took care of most of the work and answered all of my stupid questions for me
for a basic retain and build project back in 2012/2013 it cost me approx 30,000k which included Headworks costs from Watercorp, Westernpower fees, WAPC + Council fees and contributions, and the surveyor costs.The council have requirements like site needs to be cleared, fenced etc before titles can be issued and i was able to save money by doing a lot of this work myself, extra costs of 20,000 may have been added on if i was to pay someone to do it for me.
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