Triplex Subdivision in SA

[AdamInc]

Hi. I'm a bit new on this forum so hope I am getting the placement of this thread right. I've been investing in property for about 5 years (since I was 21) and enjoyed it. I've never subdivided though. I currently live in an older house on an 18m wide block that I bought for $210,000 just north of Adelaide. Almost rid of the mortgage, should have it gone in under 12 months easily. i want to subdivide into 3 and build 3 townhouses, live in 1, rent one out and sell 1. I really like the idea of building 3 of these http://www.hickinbotham.com.au/page/content/dynamic_house_designs_type/223

The living space seems great, and its a nice design that I could fit 3 of on my block.

I'm looking for feedback from more experienced investors and sub dividers...how much should this cost to do? I am told by a local agent if I were to sell 1 of them, they could help me get up to $260,000 for it in todays market.

What does everyone think?

 

[Corey Batt]

A couple things to consider here:

• Does the council development plan allow townhouses for your particular block?
  
• Whats the profit margin?
  
• Is there more profit doing a two split, or even not developing and taking up a different pathway?

If you'll only achieve a sale price of 260k on a townhouse, I'd say there is likely to be no profit or even more likely to be a loss.

 

[AdamInc]

A couple things to consider here:

• Does the council development plan allow townhouses for your particular block?
  
• Whats the profit margin?
  
• Is there more profit doing a two split, or even not developing and taking up a different pathway?

If you'll only achieve a sale price of 260k on a townhouse, I'd say there is likely to be no profit or even more likely to be a loss.

Thanks CJ.

What I am hoping to achieve is to cover all the subdivision, demolition and rebuilding costs to within say 10% with the sale of 1 of the townhouses, and then own the other 2 outright for personal use or rental. Could that likely be achieved?

 

[D.T.]

Thanks CJ.

What I am hoping to achieve is to cover all the subdivision, demolition and rebuilding costs to within say 10% with the sale of 1 of the townhouses, and then own the other 2 outright for personal use or rental. Could that likely be achieved?

It really depends on where it is and what other costs are involved, eg what did the block cost you, what did the splitting up cost you and what did the building cost you?

 

[Corey Batt]

Thanks CJ.

What I am hoping to achieve is to cover all the subdivision, demolition and rebuilding costs to within say 10% with the sale of 1 of the townhouses, and then own the other 2 outright for personal use or rental. Could that likely be achieved?

I'd say completely impossible. Most townhouse construction costs clients are doing at this time are from 160k (for 5-10 townhouses) to 200-220k for small projects. There's no way you'll be able to cover all construction, demo + subdivision costs with such a small end val.

Work out your construction costs + subdivision costs - torrens allotments are generally 20-22k at best case, strata can be significantly less if you can minimise infrastructure duplication.

But first port of call would be to see whats *actually* possible with the council development plan in general. It's pretty rare for any of the councils to allow a 3x townhouse build on an 18m wide block - for the ones I'd be thinking in that price range in any case.

 

[AdamInc]

Well I bought the place in 2010 and I'm very close to owning it without a mortgage. Its an old house though on a large block. 18x45m. I'm just keen to own a newer townhouse, and keen to maximise the block and cover the costs of that with a sub division and seeing if I can get an additional rental on here too. I've never build a house house, only bought pre existing properties.

 

[AdamInc]

I'd say completely impossible. Most townhouse construction costs clients are doing at this time are from 160k (for 5-10 townhouses) to 200-220k for small projects. There's no way you'll be able to cover all construction, demo + subdivision costs with such a small end val.

Work out your construction costs + subdivision costs - torrens allotments are generally 20-22k at best case, strata can be significantly less if you can minimise infrastructure duplication.

But first port of call would be to see whats *actually* possible with the council development plan in general. It's pretty rare for any of the councils to allow a 3x townhouse build on an 18m wide block - for the ones I'd be thinking in that price range in any case.

Thanks CJay, i really appreciate your input.

 

[Corey Batt]

Thanks CJay, i really appreciate your input.

How much do you think your PPOR is currently worth?

 

[Joeyv]

How much do you think your PPOR is currently worth?

Why would you need to know that?

 

[D.T.]

Why would you need to know that?

He's wanting to build townhouses at a loss so that he can rent one and live in one... if he's PPOR is worth enough, he might be better off renting it or selling and just buying a townhouse. Net end monetary result is much better and he still ends up in a townhouse.

 

[Corey Batt]

He's wanting to build townhouses at a loss so that he can rent one and live in one... if he's PPOR is worth enough, he might be better off renting it or selling and just buying a townhouse. Net end monetary result is much better and he still ends up in a townhouse.

Exactly. Not point manufacturing a result which is less than simple selling and buying the desired result, without any of the headaches.