APK's Development strategy - Ancillary unit - Dual income
I have committed to a strategy with my BA and I'm keen to share my journey!
I'll tell you a little about it. These are some notes I made.
Total Loan borrowings $550 k - $600 k
House $370 K
Construction of a 2 bed 70 sqm unit at the back - $120 K
Yield - Hoping for around 8%
Values
Property including house and unit will not go up in value at completion but this was not my strategy to begin with and was not the purpose of my investment strategy. My strategy is dual income and I will achieve cashflow positive, cashflow neutral from the outset. Over time CG will occur and the next step will be for me to subdivide to create more CG and equity.
Subdivision
We wont need to subdivide before building unit. Once unit is constructed I can apply to subdivide so that both houses are on seperate titles. As seperate dwellings value will go up. I can either sell one of the properties or keep them and make use of the equity growth.
Comparables
Not many comparables around as this kind of development is only just starting to take off. BA did use the term granny flat, but did not like that term, he prefers to call the the property a unit dwelling. Its a unit on its own block of land. You can subdivide on this permanent structure.
He told me about 2 examples of clients he knows who built a unit at the back and has seen good growth. Unit valued at $400 k now. I will be interested to see how profitable these ventures are in the future as not many developments of these types of dwellings have been done before (well not by many investors I have noted). Its becoming more and more popular and I'll be keen to see comparables in the next few years.
Own Supply
Unit will have its own supply. It wont be reliant on the house for anything. Its own services including sewerage, water, gas, electricity. This makes it easier for when you go to subdivide.
Time frame (approx)
September 1
Buy House hopefully ASAP lol. Say at the latest 3 months
Once offer and acceptance is signed and whilst settlement is going through the prep design work and costings for the DA will begin.
January 1 - DA to council after property settles. - 2 - 4 months for approval
February 1 - Plans plus specs to builders. Drawn up and apply for building license - 5 months
June 1 - Construction begins - 2 - 3 months
August 1 2015 Construction completed
So hopefully I'll buy the house no later than September and 9 months later the unit will be constructed. Could take 12 months all up from the day I signed up with BA to the day unit is tenanted.
I have committed to a strategy with my BA and I'm keen to share my journey!
I'll tell you a little about it. These are some notes I made.
Total Loan borrowings $550 k - $600 k
House $370 K
Construction of a 2 bed 70 sqm unit at the back - $120 K
Yield - Hoping for around 8%
Values
Property including house and unit will not go up in value at completion but this was not my strategy to begin with and was not the purpose of my investment strategy. My strategy is dual income and I will achieve cashflow positive, cashflow neutral from the outset. Over time CG will occur and the next step will be for me to subdivide to create more CG and equity.
Subdivision
We wont need to subdivide before building unit. Once unit is constructed I can apply to subdivide so that both houses are on seperate titles. As seperate dwellings value will go up. I can either sell one of the properties or keep them and make use of the equity growth.
Comparables
Not many comparables around as this kind of development is only just starting to take off. BA did use the term granny flat, but did not like that term, he prefers to call the the property a unit dwelling. Its a unit on its own block of land. You can subdivide on this permanent structure.
He told me about 2 examples of clients he knows who built a unit at the back and has seen good growth. Unit valued at $400 k now. I will be interested to see how profitable these ventures are in the future as not many developments of these types of dwellings have been done before (well not by many investors I have noted). Its becoming more and more popular and I'll be keen to see comparables in the next few years.
Own Supply
Unit will have its own supply. It wont be reliant on the house for anything. Its own services including sewerage, water, gas, electricity. This makes it easier for when you go to subdivide.
Time frame (approx)
September 1
Buy House hopefully ASAP lol. Say at the latest 3 months
Once offer and acceptance is signed and whilst settlement is going through the prep design work and costings for the DA will begin.
January 1 - DA to council after property settles. - 2 - 4 months for approval
February 1 - Plans plus specs to builders. Drawn up and apply for building license - 5 months
June 1 - Construction begins - 2 - 3 months
August 1 2015 Construction completed
So hopefully I'll buy the house no later than September and 9 months later the unit will be constructed. Could take 12 months all up from the day I signed up with BA to the day unit is tenanted.