The transformation of a Warners Bay house into three unique properties
In this case study, we delve into the transformation of an original property located in Warners Bay. What was once a modest 3-bedroom house generating a rent of $355 per week has evolved into a property development venture. Highlighting the challenges, decisions, and strategies undertaken by the owners, Nicole and Mark, with the guidance and support of Pippa at Leah Jay Investment Services during this subdivide project.
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The Challenge
Nicole and Mark recognised the potential of their rundown property in Warners Bay, envisioning a development opportunity that could reshape the house’s future. Their initial plan involved demolishing the existing house and erecting two new homes. However, Lake Macquarie City Council, had different ideas, pushing for higher density development, and insisting on the creation of three dwellings.
This unexpected turn pushed Nicole and Mark to completely rethink their strategy. They had to return to the drawing board and re-evaluate their financial landscape, which involved revisiting the bank for reassessment of their loan potential. With much perseverance, they amended their vision to construct not just two, but three properties on the lot. This included a 4-bedroom, 2-bathroom, 2-garage house, as well as two 3-bedroom, 2-bathroom, single garage houses.
The Solution
This project’s challenge was working through the significant time delays. Council approval took 11 months, longer than expected. Construction was initially projected to take 32 weeks, but it was stretched to 52 weeks due to disruptions, including the COVID-19 pandemic. These delays not only tested the owners’ patience but also led to increased construction costs, impacting the project’s net result.
Due to the change in the scope of the project from 2 properties to 3, the budget increased from $970k to 1.1 million. This took time to work alongside the bank to refinance.
“We purchased this property in 2010 for $349,000 with the vision to develop sometime in the future to expand our portfolio. We began the redevelopment project in 2018 by engaging a builder and drawing up plans and submission to council for approval. This process took a year and we then put the project on hold for 2 years while we moved to South Australia.” commented Nicole.
Despite these escalating costs, the outcome was transformative. The new properties now command a combined rental income of $2,270 per week, which translates to an impressive 8% return on investment. The market value of the properties has soared to approximately $2.5 million.
Throughout this difficult journey, Pippa from Leah Jay Investment Services played a pivotal role as a steadfast guide. Providing unwavering support, they facilitated sales valuations and conducted rental appraisals every six months to aid in financing decisions. Leah Jay Investment Services also played a vital role in mitigating strained relations between the frustrated owners, in part due to project managing from interstate, and the builder by fostering a constructive working environment.
Nicole’s hands-on approach to decision-making became a hallmark of this project. Every detail, from the selection of inclusions to the integration of solar panels on the standalone property, was thought through to enhance the properties’ appeal and functionality.
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The Result
The evolution of this development in Warners Bay from a rundown house to a trio of modern dwellings is a real success story. It illustrates the power of adaptability, perseverance, and strategic decision-making. With a valuable partnership between Nicole, Mark, and Pippa from Leah Jay Investment Services, overcoming challenges, sharing triumphs, and the ultimate realisation of a wonderful investment project was achieved.
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