Duplex Melbourne – 21 Tips for Undertaking a Duplex Development Project
Are you researching how to undertake a duplex Melbourne development project?
If that’s the case, then you’re in the right place.
Here at Little Fish, we specialise in duplex developments in Melbourne. We manage these projects, day in, day out.
Our clients end up with a decent profit and/or two quality townhouses.
What you can do with a duplex is entirely up to you. You can sell one, sell both, or live in one and rent the other out.
You wind up with options at the end of a project like this, and each option can lead to profit.
But a residential development project is a serious undertaking. Knowledge is power in this game, and it is also money.
Going in blind to something like this is a surefire way to crash and burn. We know – we’ve seen it happen.
People get cocky and start guessing and guesstimating. When they do this, they lose out.
You need to know how the entire game works, inside and out.
If your figures and projections aren’t accurate, you can be out thousands, if not tens of thousands of dollars.
But if you want to manage it yourself, you need to know what is what. That’s why we’ve prepared this list of tips for a duplex Melbourne.
Now, a word about this article. This is designed to be quick, small tips that you can do some further digging into if you want to know more.
It is a general overview. It’s worth having a look through our blog list for more detail.
So don’t view research and reading as a waste of time. It’s as much as an investment as your capital.
Ready? Let’s get into it.
1. Pre-purchase, Site identification and Due Diligence
Getting ready to purchase a site is an essential tip. Patience is critical here, as is discipline. Don’t get emotionally attached to a site. Take your time and find the right one.
Once you’ve found that perfect site, do your proper due diligence. Consider every outcome. The wrong location can mean an absolute nightmare.
Know your planning zones. Know how the local government in your chosen area manages their zones. Choose a great town planner who knows their stuff.
3. Avoid Sites with Plans and Permits
Never buy a site that comes with plans and permits, or at least tread very carefully if you do. You could be inheriting someone else’s problems.
4. Consider Essential Services
You can’t have housing without essentials—water, sewerage, power, internet, gas. If any access points are awkward, you could have a significant headache.
Be prepared if any of these services require extra work.
5. Site Orientation
Your sites orientation matters. Homeowners don’t want to live in darkness. Avoid sites that will be shrouded in shadows
6. Keep Your Emotions Out of It
We keep coming back to this, but it is essential. You need to be cold, detached and removed from your feelings in this game.
All that matters are numbers. Emotion will trip you up. Speaking of numbers …
7. Check, Double and Triple Check Your Figures
When doing your feasibilities, you need to factor in all the relevant fees, commissions and charges. This includes design, plans, town-planning, sales and everything in between.
The only variables in your numbers should be the build price and the sales price.
8. Know the Market
You need to know the market in the area you want to build in. Markets fluctuate. You need to spend time on the websites and keep track of the figures.
Why? Because you don’t want to sell a home for a price that buyers won’t accept.
There is no such thing as too much information here.
9. Getting Finance
Getting a property development loan is different from a standard home loan, or even an investment property loan. Lenders look at it as a higher risk and treat it accordingly.
Never underestimate the power of a good broker. But beware, not all brokers are equal. They all want your money, but you need to pick one who specialises in development finance.
Without finance, you’ll struggle to complete your duplex Melbourne.
10. Designs and Drawings
Pick a good architect or draftsperson, and make sure they communicate with your surveyor.
Make sure you brief them well. They need to know your ideas, inspirations and a good sense of what you want to achieve. Just don’t disregard the local vibe. You want a square peg in a square hole here.
11. Demolition Tips
If you’re demolishing an existing property, make sure to confirm with your bank or broker that it is okay to demolish before you pull the pin.
Demolishing without approval can cause havoc when the valuers come to inspect. They will be valuing a vacant lot rather than an existing property.
12. Documentation Matters
Having your construction documents ready to go before you build is a must. It can be a bore, sure, but don’t neglect this. You’ll regret it if you do.
13. Be Smart with Your Money
The old saying is relevant here; you’ve got to spend money to make money. But it’s your job to ensure you are spending it in the right place.
We call this “value management“.
Put in other terms, add value where it matters.
An example of this is using top quality stone for the kitchen and using a second type of stone in the bathroom or laundry.
14. The Tender Process
This is why you need your documentation in order.
You’ll put out your project to tender and select a duplex builder that you feel most comfortable partnering with.
The builder needs to match apples with apples, so get all your ducks in a row.
Remember that the cheapest isn’t always the best. Pick the builder that matches best with your plans for a duplex Melbourne.
15. Liquidated Damages
Don’t sign a building contract without a liquidated damages clause. This means that the builder will compensate you for any delays in the project.
We cannot stress this tip enough. Ignore it at your peril.
16. Plan of Subdivision
Subdividing your property is a must if you want to sell two properties on their titles.
If you don’t do this or don’t do it quickly enough, you’re left with a duplex that can’t be sold separately.
No subdivision equals no money for you at the end of the day.
17. Sales – Off the Plan is a Must
At Little Fish, we always sell off the plan. Why? Because you have sold your duplex before construction is completed.
Once the build is one, you have your subdivision approval (read above), and you can receive settlement right away.
This means you get paid as soon as a project is done. You can bank the money, or roll it over into your next development.
Living the dream, right?
18. Tips for Marketing
To sell off the plan, you need to market your duplex Melbourne successfully.
The trick here is to get your buyers feeling positive about the project with a solid marketing plan.
They’ll need confidence and warm fuzzies to pull the trigger, which is super important as they can’t see or touch what they’re buying.
You might want to try mood boards, 3D renders and anything that can make the homes tangible.
A well designed and high-quality brochure is definitely worth the money for graphic design and printing.
19. Worried About Marketing Costs?
If you’re worried about the marketing costs, they are a fraction of the total profit that a duplex Melbourne sale will net you.
Remember, you need to spend money to make money – it’s all about value management.
20. Be Prepared to Pay Tax
Profit from a duplex Melbourne is considered income under Australian taxation law. This is unavoidable.
People can look for tricky ways to avoid paying their share of tax, but this can bite you where it hurts.
Don’t be the next headline in the news about tax-avoiding property developers.
Consider the taxman a partner in your venture. You get your share, and he gets his.
And remember if you are paying tax it’s because you are making money, the more tax you are paying the more money you are making so don’t be afraid of tax.
21. Know the Risks
This is why we stress research, knowledge and information. Being armed with all of this before embarking on a property development project is essential.
It’s the people who dive in headfirst without any preparation that get burned. You want to come out on top here.
Now, remember, this isn’t an exhaustive list of how to prepare for undertaking a duplex Melbourne.
It’s intended more like a quick checklist so you can go off and learn more before embarking on your property development journey.
We’ll repeat it, but knowledge is essential here. If you want to succeed in this game, you need to know every single process, inside and out.
You can’t afford to take risks, guess your figures or go around shooting from the hip.
In this game, the sharpshooters win. So take a breath and be patient and keep your emotions out of the equations, literally.
If you’re not as keen to do things yourself, that’s where Little Fish can come into the picture.
We partner with investors to help them maximise their profits on duplex Melbourne projects.
If you’re keen on chatting more about partnering up, feel free to give us a call on 1300 799 277 for a free, no-obligation consultation.
We’d love to know more about your goals.