Small scale property development pros & cons.

[Horatio]

I have noted a number of roadside planning application notices over the last few years where I live detailing the intent to demolish existing single family homes & replace them with between 3 to 8 apartments. The original house is often an old bungalow (probate houses I'd say) in town or suburbs with a sizeable garden attached that lends itself well to a sufficent footprint for apartments.

I find it interesting that One could convert a single house into several & yield multiples of sale price / rental price. The names on the planning notices are in some cases local businesses that I recognise & in some cases they are what appear to be private individuals that are going down the development route.

In terms of a private individual embarking on this I wonder if the effort is worth the potential pay off. It's a relative question of course but the potential upside is big in my mind.

Thoughts on the approach & sequence:

1. Assume the existing site / house (PPR) is owned by the budding developer.
2. Run cost benefit analysis. Assume acceptable findings.
3. Run risk assessment. Assume acceptable findings.
4. Understand the local development plan & planning zone & associated restrictions for the site in question.
5. Survey site & draft plans for planning application. Submit planning application (in the name of your Development Company?). Field objections & revisions. Secure planning permission.
6. Secure purchase funding & development funding for the Development Company.
7. Sell the existing site / house to your own company that will be developing the property. Presumably the property value will be elevated if it comes with FPP approved, right?
8. Engage builder for mgmt. & execution of the build. Straight payment for T&M (preferred) or perhaps a stake in the development as payment.
9. Complete build & sign off.
10. Sell or rent the units unfurnished.

Super simplified, I know but what are the major risks in the development process & operation of a multi tenanted apartment complex thereafter.

• Woud you do it?
• Why?
• Why not?

 

[presidenttttt]

Common in UK and likely increasingly common in Ireland as it becomes harder for investors to find value for money on the more familiar and common options

 

[Horatio]

I'm revisiting this topic as I've seen an increasing trend in my local area of demolishing single family home to replace with multi unit blocks.
Anyone on here have direct experience they can share? Horror stories & success stories are both appreciated to get the full spectrum of experiences & outcomes.

 

[Brendan Burgess]

A friend of mine did it, or at least, tried to.
He had a house with a huge back garden.
A house three doors down had done it very successfully.
He was assured planning would not be an issue.
His neighbour told him he would object and stop it.
Wife did not want to have the hassle, so they bought a new home before applying for planning permission.
Applied for planning permission - refused.
But An Bord Pleanála would of course wave it through, except that they did not.

Close to bankrupted him. Bank wanted both houses sold and mortgages cleared.

So if you already own the house, then apply for permission and see how you get on. It will cost you and you may be refused.

But I would advise against buying a house with a view to doing it.

Brendan

 

[cremeegg]

I wonder if the effort is worth the potential pay off.

I sometimes point out to my friends the 4 sites which I did not buy for exactly this purpose. 3 would have made me a lot of money, 1 would have bankrupt me.

There can be truly enormous profit, but the risk is insane. No cost benefit analysis can truly capture that risk.

The first question you must ask yourself is, what would the consequences be if I had to sell for a knock down price. Say you have 4 apartments ready to sell at a total cost to you of €1.2m, and the market falls and you have to sell for €150 a unit, a €600k loss. If your attitude is that would be awful, but I would live, then maybe go for it. If you would lose your own home, stay away.

 

[Brendan Burgess]

If you own a property which is suitable for this venture, apply for planning permission.

If you get planning permission and you are not a professional builder, then sell on the property and let a builder take the risk.

 

[Bronte]

I'm revisiting this topic as I've seen an increasing trend in my local area of demolishing single family home to replace with multi unit blocks.
Anyone on here have direct experience they can share? Horror stories & success stories are both appreciated to get the full spectrum of experiences & outcomes.

Yes I’m in the middle of this. The home/house on purchased site has been empty a long time, the pre planning meeting went very well. Recently. We didn’t go for a multi unit if you are talking an apartment block. Our expert didn’t expect our plans for multiple to be so well received. We’ve put a lot of our amateur thought into it. Been looking for the “right” site about a decade. Density is ok because of its location. We didn’t dare suggest an apartment block type.

Ireland needs to get real about housing. A property expert suggested to me that I approach a housing charity, they fund everything he said. We want to do our own thing.

 

[Purple]

The first question you must ask yourself is, what would the consequences be if I had to sell for a knock down price.

I think the real question even if you made lots of money would it be worth the stress and hassle? If you are reasonably financially comfortable then a lot more money will not cause a large increase in your happiness. Is it worth falling out with neighbours and years of stress and worry?
If you are in the sector, buy a site that is not close to where you live and have the time, resources and mindset to do it then that's a different story but it's not a get rich quick play.