Here is a feasibility study summary
A subdivision project can more often than not have great dividends and be a great option for the person sitting on a bit of land in a high demand area. You split the land in two, or maybe three, sell off the other lot/s and make way more money than if you sold the property as a whole.
A lot of the time, in these situations, people tend to demolish the existing house so they have a simple piece of land to divide up and sell. But there is another option…
You could shift the existing housed backward or forward, lift it up in the air and build a bottom story underneath, then you can sell off the other part of the land or build another house.
You may tend to ask questions like, how much will this cost? When will my project finish? How much profit can I actually make?
The feasibility of this kind of project is actually better than the other option of demolishing and rebuilding new mandurah homes.
Take the below example of a typical R30 subdivision:
|Feasability to Lift up, build under & Subdivide||Feasability to demolish and rebuild two 2 storey Homes|
|Purchase Price||$650K||Purchase Price||$650K|
|Strata Costs||$30000||Strata Costs||$30,000|
|Replace top half with hardi plank||$5500||Demolish Existing Home||$20,000|
|Replace Bottom half with Cladtex||$7500||Rebuild Front (3×2) 2 Storey Home||$365,000|
|Demolish/refurbish bathroom and toilet||$15000||Rebuild two Back (3×2) 2 Storey Home||$730,000|
|Lift & Shift House||$30000||Site Works Allowance||$17,500|
|Site Works Allowance||$5,500||Demolish & Rebuild 2 homes||$1,162,500|
|Build underneath||$210000||Extra Interest/holding Costs||$35,000|
|Cost to Lift & Build under||$337,500||Total Cost of Development and Land||$1,847,500|
|Sell Rear Lot #1||$320K||Sell Front Home||680K|
|Sell Rear Lot #2||$320K||Sell Rear Strata||680K|
|Sell lifted home||$650K||Sell rear Strata||680K|
Two examples we see here. One is to lift existing house up and build underneath and then subdivide. The other is to demolish, subdivide and rebuild.
The total cost to do each project differs greatly and the return also differs.
Cost/return estimate Lift and build under: 1,290,000 – 987,500 = $302,500
Cost/return estimate to demolish and rebuild homes: 2,040,000 – 1,847,500 = $192,500
This example is of a typical R30 subdivision in the Perth area. The time frame difference is actually quite amazing as well. To lift up and build under you are looking at approximately 6 months. To demolish everything and build from scratch it will be around 18 months.
Many real estate agents and Home Builders Mandurah will tell you to go with the demolish option, but with 2 story homes built by Great Living Homes who have to ability to make things faster and cheaper why would you go anywhere else?