Buy Option theory from novice…

Marekm,

The only thing to consider (actually, it’s not at all… but one thing to consider) is make sure the council will allow you to subdivide before you place the option. (Otherwise you will waste your option fee)

Funny you should post this though, because I have another idea kind of similar… If anyone could give me thier thoughts on this it would be good…

Put an option on 2 blocks of land next to each other in a zone 2B area. Submit for DA approval to build as many townhouses as you can fit on the land, then sell the option to a developer. If you do the maths, there is alot of money to be made, with only small outlay. The only down-sizing, is that it will proberbly take a lot of door knowcking before you find 2 consecutive houses that will agree to give you an option. But if the money is there…

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Hi Marek,

Here are some comments.

Firstly, a zoning like 2A or 2B doesn’t necesarily mean the same thing for two different councils.

And yes, there are pitfalls. Too many to mention in this post.

It is essential that you get hold of the council’s guidelines (or code) so that you know whether or not you can do what you think you can do.

Getting an option from an owner is something that is very common so you are on the right track there.

>>I would then get a DA to subdivide the property into two blocks and then sell the second block, using the proceeds of that sale to assist when I executed the call option originally purchased.<<

You cannot sell the second block unless you pay for it first.
However the buying and selling can be done simultaneously i.e. you settle your purchase and your sale both at the same time and you can therefore use your buyer’s money to pay your vendor.

And yes, you do need the owner’s consent to lodge a Development Application. You also must have a fair idea how long council will take to approve it so that you don’t run out of time.

Some of my questions are:

>> Does this theory fall into the realm of science fiction ?<<

No, it is perfectly feasible as long as you know that you need to be able to come up with money to pay the council’s application fee and the surveyor’s cost and the architect’s fee (if required)and a deposit if necessary.

>> How long will it likely take and what will it cost to get the DA and subdivide (where can I go to research this aspect further ?)<<

Go and ask the council, take holiday periods into account and thence tack a couple of months to the time OR have a facility in the option agreement whereby you can extend the time by paying the vendor a certain sum of money.

>> Would it be profitable to sell (quick flip) the complete property with the DA approval for subdivision ?<<

Yes, very much so.

Someone mentioned that it will be difficult to do. The right answer to that is : ‘Search and you will find’

The property will be worth more as a development site than as a house so you can afford to pay the vendor more than just house value.

The option fee can be any amount you and the vendor can agree upon. I have tied up properties with a $ 100 option fee (and even with a mere
$ 1-00)

You can start selling the property the moment you
have plans prepared !!!

I posted yesterday that I would be happy to team up with someone who lives in Sydney and who would like to get involved in development sites.
(There is a lot of money in this type of real estate).

Because of physical problems I find it difficult to walk longish distances though I have extensive experience in this area and I would welcome someone who is prepared to do the basic work.

I am actually quite surprised that no-one as yet has bothered to talk to me about this offer.

Pisces133