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Dianne Kovacevic and her husband Dave did everything in the right order. They bought the block. They knocked the old house down. They moved into a rental with two small children, holding an unconditional approval for the construction loan.
Then someone inside the bank looked at the file again, and pulled it.
They were owner builders, and they had asked the bank that exact question before they started and had the answer in writing, which made no difference at all. That left them with no house, no finance, two small children and a mortgage running on a bare block, and they finished that project by borrowing money from Dianne’s parents.
Do the work before you go looking for a site
What stands out about Dianne and Dave is how long they spent getting ready before they bought anything at all. Dave was a bricklayer who applied for his builder’s licence, was offered a limited one, and refused to accept it. The board told him he needed more experience in slabs and foundations, so he left bricklaying for a year, took a job with a volume builder as a supervisor, and wore a large pay cut to get it, then applied again and was granted the unlimited licence. While he did that, Dianne completed a diploma in contract drafting and estimation.
All of that happened before they owned a single site.
Then they chose where to build with the same care. They were living in Ivanhoe and knew it was out of reach, so they bought in Heidelberg Heights instead. A university, a major hospital and a consistent housing stock across the suburb meant they could see exactly who would want the finished product. They built a standard specification townhouse for that buyer, not a high end one for a buyer who was never coming.
That is a sensible first project, and matching the product to the demographic is more than half of the result you end up with.
The costs that never make it into a first feasibility
Here is where the numbers get interesting, and where most first feasibilities fall over long before anyone notices. On that first site, development contributions to the council came to $58,000. The development levy, payable on three dwellings or more, added roughly $20,000. Neither of those is obvious to someone pricing their first project.
Civil works are the other one that catches people. On the site Dianne and Dave are building now, the underground pipework alone came to $46,000, against $16,000 on each of their two previous developments. The difference is an easement running along the rear of the block, which they knew about and priced properly before they bought it.
So what do the numbers say about your site? Not the build cost, which everyone prices, but the contributions, the levies, the civil works and the holding costs that build while the council takes its time. On that first project the council took two and a half years, including a trip to VCAT, with a mortgage running the whole way through.
The design decision that showed up in the sale price
They built four townhouses and put double garages in all of them, which in the two middle units took space directly out of the living areas. Those two were hard to lease and hard to sell. The front unit sold for $1,065,000, a record for a three bedroom in the area at the time. They kept the rear unit, now worth a little over a million. The middle two sold for $850,000 and $895,000, and Dianne is clear about why. The finishes were beautiful, with stone through the kitchen, the laundry and the window reveals, and proper hardwood floors throughout, so it was the living space alone that let them down.
As Rebeka put it in the episode, it is not about the size, it is about the way the space works. Draw the furniture in to scale before you commit. An open plan area can look generous on a plan and fail the moment you put a couch and a walkway in it.
Even with all of that, the project made more than $1.3 million.
Development finance is a different game
Dianne became a mortgage broker after Dave got sick and took a year off work, leaving the family with no income at all. She came from a finance background and still did not know how to fund her own build.
Her point is worth sitting with: a home loan and a development loan are different products, and most people assume that because they have bought a house, they understand finance. Rebeka had four banks say no before she met a broker who worked in development and told her it was straightforward.
A good broker looks at serviceability across several scenarios, at equity you already hold, at company income, and at non bank lenders you would never find alone. Dianne will pull suburb and property reports on a site before you buy it, not after.
Do you know your borrowing capacity before you go looking at blocks? Most people work it out in the wrong order, which costs them either the site or the sleep.
Key takeaways
- Get the licences, the skills and the borrowing capacity sorted before you buy a site, not after.
- Price the contributions, levies and civil works. On a small townhouse site they can run past $100,000 combined.
- Match the product to the buyer who actually lives in that suburb.
- Draw the furniture to scale. Living space sells; a second garage may not.
- Always hold a contingency. COVID stopped Dianne and Dave renting a finished project they were paying for.
- Talk to a broker who understands development before you commit to anything.
Listen to the full episode
Catch the full conversation with Dianne Kovacevic on Building with BuildHer, available on Spotify, Apple Podcasts, or wherever you listen. You can also listen to the episode here. Dianne is at DK Capital Lending, and her details are in the show notes.
Ready to run your own numbers?
If you have been sitting on the fence working out whether a project stacks up, that is exactly what we teach inside BuildHer: how to read a site, build a feasibility you can defend, and fund it properly. Explore DevelopHer, or book a call with our team.
