Overview

With a two speed housing market, where owner occupier style housing was in high demand and investor oriented stock was being shunned, it was important to develop a product that was more generous in overall size and utility, to ensure we attracted and captured that strong demand from  owner occupiers.

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The Lot had an existing dwelling that was in modest condition and while it would eventually be knocked down to make way for the incoming housing, in the interim it was valuable in covering the holding costs. At the time, prevailing interest rates were low, and so the funding was able to be structured as an interest only product so that the rent from the existing dwelling very nearly covered the entirety of the holding costs.

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Taking advantage of the most complimentary parts of the LEP and the State Government's Low Rise Housing Diversity Code, we were able to devise a project plan to sub-divide the single Lot into 3 titles, providing a saleable dwelling on each title.

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Results

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Projected Total Cost: $3,560,000 (land, building & other)

Investment Required @ 70% LVR: $1,068,000

Market Appraisal: $5,950,000

Realisable Cash Profit: $2,390,000

Project completion: 24 months

  

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Overview

When the NSW Affordable Housing SEPP was released, it provided a number of planning initiatives that overruled the local council restrictions. One of these was the permissibility of secondary dwellings (granny flats) subject to some fair and reasonable controls. This project was one of the earlier of its' kind and while the suburbs are now full of this concept, with off the shelf designs from both specialist and project home builders, we still see a lot of mistakes that we were conscious to avoid at the time.

 

Some of the important considerations at the time, and that equally apply to any similar development today are:

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• Don't overcapitalise the land. We see too many sites being over capitalised today. While the yield can be attractive, in the short term, overcapitalising can make it difficult to reclaim that initial investment

 

The property could be sold as is to an another investor with an attractive yield. However, since investors only typically make up 30% of available buyers, to access the other 70% of potential owner occupiers, our proprietary design has a strategically located pre-framed doorway within the common wall which enables the easy conversion from a modest 3 bedroom with attached secondary dwelling, into a full sized generous family home suitable for owner occupiers.​

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•  Our insights from our property management team made us aware of the increased turnover of tenants (they tended to be more transient), and the potential for longer vacancies between tenants (they often took longer to fill all else being equal). This could principally be remedied by addressing some of the most common issues tenants faced.

  • Size was important, utilising the full 60m2 permissible under the SEPP, to enable a second bedroom and bigger living area.

  • Privacy was important, so a separate and private access and yard were designed so no one felt like they were living in another person's back yard.

 

By utilising corner lots we were able to address the issues above, and to utilise some of the discounts often available to corner lots (due to the additional side set back requirements)​

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Results

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Total Cost: $345,000 (land, building & other)

Investment Required @ 80% LVR: $69,000

Yield: 8.32% p.a. ($350 + $200 = $550 weekly total rental income)

Market Appraisal: $410,000

Realisable Cash Profit: $65,000

Project completion: 12 months

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