Subdivide and build duplex with friends

[enzso]

My wife and I have been interested in a while in buying a knock-down house, subdividing and building a duplex. The thought was to live in one and sell the other. We planned to do it in our suburb but land values put the project out of reach. We have no interest in moving to a cheaper area.

We are very friendly with another family in a similar situation to us (growing kids in a too-small house). I had a thought recently that why not join forces, purchase a block together, and each build our own homes on the block. By going through the one builder we could save some cash, but if for some reason we couldn't agree on a builder we could just go ahead and build our own.

Apart from some potential risks during the settlement phase with the possibility of one party or the other dropping out for some reason, and so long as we can agree on the subdivison plans, I can't see what the downside would be. Can anyone else?

 

[Peter_Tersteeg]

The biggest risk would be when it comes to the design and construction of the duplex itself. What happens if you can't agree on a design? What if you find a design you like but the council doesn't approve it and the changes are fine by one party but not the other?

You're also putting your financial situation in their hands and vice versa. If they won't pay their share of the mortgage whilst the construction is proceeding then you'd be required to make good.

There's a lot of risk in any joint venture in any number of ways. If you do proceed you should consult a solicitor to nut out the details and 'what if' scenarios.

Personally I'd be extremely picky about a JV partner, they'd have to be very much on the same page as me. I wouldn't do a JV with my closest family members (but that's just me).

 

[enzso]

The biggest risk would be when it comes to the design and construction of the duplex itself. What happens if you can't agree on a design?

There's a lot of risk in any joint venture in any number of ways. If you do proceed you should consult a solicitor to nut out the details and 'what if' scenarios.

Personally I'd be extremely picky about a JV partner, they'd have to be very much on the same page as me. I wouldn't do a JV with my closest family members (but that's just me).

Yeah I agree we'd need to involve a solicitor. Strangely enough I find the concept of doing this with friends much more attractive than doing it with family. I think the best thing to do early on would be to bring some possible designs to the table and see how we each feel about the other's tastes. If it looks like there's some compatibility on design then we can proceed to the next step. We're both pretty easy going couples. I find it difficult to imagine a situation where we wouldn't be able to compromise - but I guess that's why I'm asking the question.

 

[Brady]

My manager did a similar thing.

Purchase old house on big block with friend, demolished, subdivided and built 2 new homes...

Worked well for them, but often hear stories of how it doesnt

 

[baby blue eyes]

Had a friend do this in Fairlight Nsw recently. Ended up with masses of equity. Each designed their own half of the duplex to suit. One has a business run from home.
The families could never afford to do individually. Brave move but great outcome with each family having their own property in their preferred suburb and free to move onwards without each other.
My friend also kept his two bed unit in same suburb and within a few short years has gone from renter to two properties. Not bad...

 

[neK]

You also need to take into consideration that one half of the land is always going to be worth more than other.

For example, say the backyard faces West, therefore duplex on the right (looking at it from the street) has all its windows facing north. The duplex on the left faces south (hence its colder and dimmer).

Do you split the costs? Little things like this need to be taken into consideration before any work starts.

 

[Aaron Sice]

You also need to take into consideration that one half of the land is always going to be worth more than other.

For example, say the backyard faces West, therefore duplex on the right (looking at it from the street) has all its windows facing north. The duplex on the left faces south (hence its colder and dimmer).

Do you split the costs? Little things like this need to be taken into consideration before any work starts.

find me one, just one, valuer that will take that touchy feely approach to valuing a property, considering most are desk vals.