What Do I Need to Do to Establish a Multi-Unit Housing Project in Queensland?
Have you ever passed by a big piece of land and wondered why nobody has put up a few
Have you ever passed by a big piece of land and wondered why nobody has put up a few townhouses there? Or perhaps you have a large backyard that seems to be wasted space.
It’s a great question. One of the cleverest methods of accumulating wealth in Queensland is to convert one block of land into three or four houses. However, it is not as easy as simply hiring a builder and getting down to it. It is not at all like remodeling a kitchen or putting in a deck.
Step 1: Does It Work Mathematically?
You must look at the numbers before you fall in love with a property due to the nice view that it has. This is referred to as a “feasibility study”. The prices in Queensland have fluctuated in the past years and therefore you must be realistic.
The Simple Formula:
You must ensure that the Final Value of your units exceeds All Your Costs, so that you are left with a healthy profit (you want 15-20%).
The land and the building are not the only costs. You also need to budget for:
- Purchase Costs: Legal fees and stamp duty.
- Consultants: Town planners, architects, and engineers.
- Council Fees: In Queensland, there is a tendency that you have to pay infrastructure charges to the council whenever you construct a new unit. This subsidizes the additional road and sewer strain. The price may range between $25,000 and $30,000+ per unit.
- Holding Costs: You still need to pay mortgage and rates waiting to get approvals and buildings.
Step 2: Locating the “Goldilocks” Location
Not all pieces of land are developable. You cannot just construct townhouses wherever you like.
You should have a look at the local Council Planning Scheme (such as the Brisbane City Plan or the Sunshine Coast Planning Scheme). You are searching in certain areas:
- Low-Medium Density: This is the bread and butter of townhouses or duplexes.
- High Density: This is for taller apartment buildings.
Watch Out for “Overlays”
Although the zone may be correct, you should look to see whether it has problems that are not visible, known as overlays.
- Is it in a flood zone?
- Is it in a bushfire area?
- Is it a preservation character area (such as pre-1946 timber homes)?
When a site has these problems, that does not imply that you cannot build, but it will be very difficult and costly. Watch the interactive maps of the council prior to making an offer.
Step 3: Developing Your Dream Team
You cannot do this alone. Development is a team process, even though you are a tool-savvy person. You are the Project Manager and you must seek the services of professionals to take care of the details.
In your core team, you should have:
- Town Planner: They show you the way around the maze of the council. They understand the rules to the letter.
- Civil Engineer: They determine the manner in which to manage stormwater and sewer connections.
- Surveyor: They survey the land to make sure that you do not accidentally build on the fence line of your neighbour.
- Architect or Building Designer: They bring your ideas to life.
Don’t Forget the Legal Side
It is not merely a purchase of a house, but a business transaction. You must have contracts that defend you in case of something going wrong (like when the council says no). It is very important to have the correct legal advice. As an example, hiring the services of seasoned property development lawyers on the Sunshine Coast who you can trust would be a good idea to get you through option agreements and due diligence clauses that are particular to the unique market conditions of the area.
Step 4: The Council Approval Maze
When you have a design, you should request council permission. This is referred to as a Development Application (DA).
Your application in Queensland will typically fit into one of two buckets. It is actually necessary to be aware of the distinction:
Code Assessable (The Easy Way)
This implies that the planning scheme has all the key rules of your design.
- The council has to compare it with the code.
- It does not provide any public notice.
- Your neighbours do not have the right to object formally to stop you.
Outcome: Improved speed and reduced risk.
Impact Assessable (The Hard Path)
This is to say that you are violating some rules or pushing the boundaries (such as constructing something too high or too near the border).
- You must put a sign on the fence and take an advert in the paper.
- Objections can be made by neighbours.
- The council may say no due to community impact.
Outcome: Slower, more costly, and risky.
Pro Tip: In your first project, you should attempt to use a design that is accessible by code. It saves a lot of headaches.
Step 5: Financing and Construction
Obtaining a loan to fund a development is not similar to obtaining a home loan. Banks are much stricter.
They often require “Pre-sales.” This implies that you may be required to sell 2 or 3 of your townhouses off the plan (before construction) only to get the bank to release the money to construct your houses.
Picking a Builder
At the time you are ready to construct, watch your contract. The building costs in Queensland have been erratic in the recent past.
- You should not have a Cost Plus contract in which you pay what the materials cost on the day.
- Attempt to obtain a Fixed Price Contract. It may be a little more expensive initially, but it will save you in case the price of timber or concrete increases halfway through the work.
Step 6: The Final Stretch – Titling and Management
Congratulations! The structure is complete, the landscaping is spectacular and you are about to sell.
However, you cannot sell the units at this time. The paperwork you have to do is to divide the one big land title into individual titles of each unit. This is called “Plan Sealing.”
Incorporating the Body Corporate
The new owners will share things such as the driveway, the roof insurance, or even a common garden, and so you need to establish a Community Title Scheme.
This necessitates a body corporate known as a legal body to run the common areas. It is clever to establish this at a professional level at the very beginning to ensure that future buyers will have a clear budget and know exactly what they are spending. By hiring professional body corporate services, you can be certain that your community management statement is legal and the running of the complex is not complicated as soon as the first resident moves into the house.
Conclusion
It is a massive undertaking to embark on a multi-unit project, yet it is also an extremely rewarding one. It requires time, a team that works well, and a lot of research. However, with these steps and by maintaining realistic numbers, you can make that “what if” idea a profitable reality.
