Want to knock down and build multiple dwellings?

As the population in our major cities continues to grow and with the centralisation of the workforce there is an increasing trend toward greater density of population and smaller households. What does this mean? It means where there used to be warehouses there are now blocks of apartments and where there used to be a single family home, now there are quite often two or more dwellings on the site.

If you are thinking of knocking down an old house and re-building multiple dwellings, there are a number of considerations that should be taken into account.

 

Where do I start?

It is important to get a few good people in your corner.

  • A property surveyor or town planning consultant should be able to guide you through the initial stages and help you navigate approvals and town planning
  • A good Mortgage Broker will be able to provide guidance on the best options to finance your project.
  • A reputable builder who has experience with this type of construction will help you avoid some pitfalls.
  • A Real Estate Agent with expertise in the local market will know what price your property can achieve

There will no doubt be some challenges (there nearly always is!) but it can be a worthwhile and profitable exercise if undertaken properly.

 

Size does matter

The size and dimension of a block will be a major determinant on what type of multi dwelling structure (if any) can be built on the block. Setbacks (how far back from the street a dwelling must be) as well as Easements (property clear ways) and Covenants (restrictions on use) must all be well understood. Council Planners will have guidelines on exactly what can and cannot be done on a particular block.

The location of driveways, height restrictions and limits on size per dwelling will all have a major impact on the viability of the project.

 

Do the economics stack up?

Some back of the envelope number crunching will be able to tell you whether or not what you are looking at is viable. Know your costs and build in a buffer. Do your research into what Townhouses and Units are selling for and it is essential to know what your land is worth.  A Real Estate Agent will be able to help you estimate the selling price for the property once it is built or you can engage the services of a Property Valuation service.  Winston Lo from Hot Spot Property agrees “There can be a great deal of value created with the right kind of build and the right location, but it can be a costly mistake if you don’t get it right.”

 

Quality considerations

Depending on whether you want to live in or sell a particular dwelling will influence the decisions you make in relation to the property fit out. If you have a passion for pink, then by all means fit out your pad in the shades that you desire, however if you are selling, then maybe neutral tones are a bit wiser.  Same theory applies for your choice of fittings, blinds, flooring and the like – generally steer away from the more divisive styles and stick with more popular ones, even if they aren’t necessarily to your own taste!

 

Standard build or custom designer?

Your budget and quality considerations will influence whether or not you engage an architect to plan and design the property of your dreams or select from designs that are already in existence. Builders such as Metricon and Porter Davis have options for builders which offer standardized designs and supporting service, however with minimal modifications at a relatively low cost compared to alternatives that are custom designed.  If you are targeting a higher end sale, then a more custom designed property with all the bells and whistles may be more what you’re after.

 

Is the Taxman going to be interested in this?

If you have previously lived in the property before knocking it down, part of your project may be exempt from Capital Gains Tax.  Narelle Pasavento from Prosper Advisory advises clients on these matters “There are a range of income tax, capital gains tax and GST issues that need to be considered when thinking about building/developing. In many circumstances some profits can be subject to income tax.   It is important to speak to an Accountant early as everyone’s circumstances are different.”

 

Getting approvals

Every council will have rules and regulations around what can and can’t be done with your knockdown and multiple dwelling. This includes building permits, demolition permits, dual occupancy permits and sub-division permits.  A building surveyor or planning consultant will be able to guide you through the process, or your builder if you have engaged one will be able to assist.

 

Will I be able to get Finance?

Unless you are in the fortunate position of not needing it, you will need to go through the process of obtaining finance for your build. Some lenders specialize in lending for these kinds of projects and your Mortgage Broker will be able to help you find the best lender and the best rate for your project.  The valuation for the project is key to determining the funding available and will depend on the value of the land, the cost of the build and the quality of the fittings used.

 

 

Interested in a knock down and build?

If you want to talk through options you can get in touch for a free, no obligation chat.  

You can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

 

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

Buyers Advocates are on your side

Today’s Guest Blog is by Ray Becher, Principal and Founder at Reimund Property Advisory

As a professional Buyers Advocate, one of the questions I get asked most frequently is “What can a Buyers Advocate do for me that I can’t do for myself?”. My response is always the same in that it always pays to have a professional look after your best interest.

Buying a home, or investment property is an expensive exercise and fraught with situations to make mistakes, if you get it wrong (and a lot of people do) it will cause you a lot of stress, take a lot of your time and will always cost you more money.

A good Advocate or Property Advisor will save you time, manage the emotions of buying, remove the uncertainly and confusion of buying, and most importantly, negotiate you the lowest possible price when securing the property, in short they will save you time, stress and money!

Vendors engage Real Estate agents to secure them the highest possible price, and Real Estate agents are very good at what they do, so it makes sense to engage a Buyers Advocate and industry professional to represent you.

The Advocacy sector is a fairly new industry and there are more Advocates appearing than ever before, so it pays to do your research before engaging one, and these are the key questions you should be asking;

 

  1. Do you own property yourself?
    There are a lot of advocates that have never bought property for themselves, would you feel comfortable with an Advocate that doesn’t know what it like to have the experience first-hand? (Neither would I).
  2. Are you Independent?
    There are Advocates that receive commissions from other industry players (builders, developers, agents, brokers) and this can influence the level of advice they provide.
  3. Are you licenced?
    Advocates should to be licenced with Consumer Affairs to do what they do, if they are not licensed, do not engage them!
  4. Is your fee negotiable?
    Most advocates are Fee for Service, and may offer either a flat fee, agreed fee or a percentage fee – Either way, if they are licenced, their fee (by law) is negotiable.

Whether it’s your first home, you’re a seasoned, or new investor, you’re upsizing or downsizing, your Advocate should act as an independent consultant with no third party connections, and offer you expert and trusted opinion and peace of mind when purchasing.

For more information on Buyers Advocates and how one might be able to assist you with advice and securing property, click here, or contact
R-logo-colour3

 

 

 

 

www.reimund.com.au

info@reimund.com.au

(m) 0417 546 539

 

Ray Becher is Principal and Founder of Reimund Property Advisory. After 20 years negotiating and managing strategic partnerships for some of Australia’s most reputable and blue chip companies, Ray blends his corporate expertise with his passion for finding and negotiating the purchase of the perfect property for every one of his clients. A third generation property developer and investor, Ray has been involved with property acquisition and development his whole life. He is a licenced Real Estate Agent and Auctioneer.

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.