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First Time Subdivider

Discussion in 'Real Estate' started by dynasty007, 26th Jul, 2010.

  1. dynasty007

    dynasty007 Member

    Joined:
    24th Jun, 2009
    Posts:
    20
    Location:
    Melbourne, Vic
    Hi All,

    I am about to place an offer on a property in Melbourne which looks good to subdivide and wanted to get some basic costings from ppl who have done this before.

    My plan is to buy (price is 402k), subdivide the block into 2 (673 sqm, rectangular in shape, easement along back fence line) and sell the back parcel with a plan & permit (approx 320sqm). Building 3 br unit appears to offer no more margin, especially when you factor in concrete driveway and carports for both dwellings.

    This is my first time so I am being cautious with my calculations to make sure I don't end up in the red!!

    Calculations:
    Plan, permit & surveying: -35k
    Miscellaneous costs: -7k
    Utilities Connection: -10k
    Fence -3k
    Hold Costs-12 mths -29,355k
    Lost value to front house due to smaller block -20,000k
    (+ 12 months capital growth)

    TOTAL COSTS: 104,355k

    Sell Land Parcel +140k
    + Rent (existing house) +17,680k
    TOTAL INCOME: 157,680k

    TOTAL PROFIT = $53,325 - Capital Gains

    I know my numbers are a bit rich in some areas, can anyone give me an indication regarding what it will cost to subdivide in melb?? 4 houses in the street have put a unit at the back so there should not be too many curve balls in getting approval. I had the initial consultation with council today which confirmed that there are no covenants, restrictions etc.

    If I can fine tune my costs I think there may be more $$ in this deal. :cool:

    Cheers,

    Mike.
     
  2. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi Mike

    Sorry I can't help you with Melbourne but your best bet would be to ask council of costs here and add 10% for contingencies.
    Best of luck with it all :)
     
  3. dynasty007

    dynasty007 Member

    Joined:
    24th Jun, 2009
    Posts:
    20
    Location:
    Melbourne, Vic
    No worries Jacque thanks for the advice. Does anyone else have estimates for subdivision costs in Melb??
     
  4. Gman993

    Gman993 New Member

    Joined:
    8th Jun, 2010
    Posts:
    1
    Location:
    Sydney
    Dont forget Council Contributions for the additional lot. Not sure about Melbourne, but in Sydney these range from $20,000 to $50,000 per additional lot created by the subdivision.

    Also ensure that you can get services into the lots (particulary drainage and sewer).
     
  5. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Mike
    Have you ended up buying the property?
     
  6. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Demolish and build new houses for profit?

    Hi dynasty007, thank you for your words about the subdivision.

    It is quite helpful since I just start to think about the possibility of the subdivision of my houses.

    I feel you have read a lot, so would you mind to give more information:

    1. Plan, permit & surveying: -35k; What need to get the permit from government? What's the sequence to do for the plan, permit, and survey? What's cost for surveying and what's little or most could we expect from a Surveyor?

    2. Miscellaneous costs: -7k; What're the Miscellaneous costs? The better the more details!

    3. Utilities Connection: -10k; They should be the Gas, Water, Electricity, and Telecommunication, should they? Could we get the prices before we do? Where if we can?

    4. Fence -3k; Could we ask the builder to do the job? What's the cheapest way for a looking-reasonable fence?

    5. Hold Costs-12 mths -29,355k; Do you mean the rental cost for your family or something more you concern about?

    ***
    Building cost? how to build houses for best return? how to find a trustful and cost sensitive builder without over-charge?

    Any information and ideas to reduce the cost, promote the market price without paying more than that to promote.

    Anyone has contracted all from the start to end which get the profit as you expect? Any information on how to do that?

    Thank you in advance!
     
  7. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Options to build new houses

    There are possible options to build new houses for home house or investment property:

    1. Owner builder
    2. Builder option 1: Seperate the buidling procession into two parts, part you could do, and part that need the builder do if you don't know enough about the building house3
    3. Builder option 2: Get a builder as baby sitter which means each step you would discuss with your builder to get different viable options, you make the decisioin, and then you get the best promising to learn and use the strength of the builders.
    4. Builder option 3: Contract all out, which means you give the land to the builder and get the key for your new houses to sell ot live.

    All of the options are viable if you could give the required time. The key is what finally you want to turn to be.

    I prefer builder option 1 but prefer start from Builder option 2.

    However all of demolishing and building is about the cost and the target selling price without matter you build to sell or get a home house. No profit if compared to buy or sell directly from/to the market, no point to do anythhing about the new house.

    Of course, if we have enough money, we could just buy and buy but it is definitely not a case for all who post and read here.
     
  8. dynasty007

    dynasty007 Member

    Joined:
    24th Jun, 2009
    Posts:
    20
    Location:
    Melbourne, Vic
    Thanks to all those who have posted! My apologies I have been offline for a while. Bill, I have not bought yet. The market in Melbourne in the Northern suburbs where I am looking is HOT, just started to stagnate now so im planning to grab something by New Year.

    Wdongli: regarding your post, I am probably not the person to answer these questions. There are plenty of ppl on here with vast subdivision knowledge, Im just new to the game and looking at completing my first project.