Hello all![biggrin] Just signed up and looks like i’ve arrived at the right place. I have a PPR and one investment prop but now looking to enter into the area of sub-divisions here in WA metro area as this appears to be a hot option right now in the light of a slowing market but have limited knowledge. Wondering if anybody can shed some light and expertise. Would be much appreciated.[cap]
Lionel Bocher
Hi Lionel,
you’ll have to check with the council if you’re allowed to sub-divide certain blocks or property as they have restrictions. There is a cost to the application of sub-divisions if it goes ahead but this is different for every state. First assess what your intentions are to to with the sub-division. Do you wish to buy and hold or develop and sell off or just rent one or rent all – the choice is yours.
Hope this helps.
Kind Regards,
George.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
Hey George. Thanks heaps for your reply. I managed to hunt around on the site and obtained info throughout the forums. To be more specific though i was looking at duplex potential blocks already zoned with an existing property needing a little reno. Was then looking to onsell the sub-divided portion of the block ASAP after it was approved in order to put the proceeds into the reno and subsequent loan on the property purchase to the extent of turning it into a CF+ property. My concerns are should the original deal be done through an options contract and if so how much CG is applicable on the onsell and basically if this is a feasible strategy or if theres a better alternative[blink]
Lionel Bocher
Gday Lionel, not sure how it is in the west, but here on the east, the type of property you describe are quite hard to find, although, they are definately out there. Problem with option contract is that because there is so much competition looking for these deals, vendors are reluctant to accept the “option”, they can pretty well pick and choose the terms and conditions they want. This is only my experience anyway, the more you try with the option (say subject to D.A) the more chance you have of getting a great deal.
My 2 bobs worth! (just joined here today too)
cheers
Baz
My advice is when looking at these types of property always submit offers subject to subdivision being approved. You can then submit your plans to council before you have made the purchase. Just because an areas is zoned 40 etc does not mean the council will automatically grant approval, most cases yes but always be cautious.
I would say allow approx $30 to pay for all costs associated with the subdivision. I am not sure about the capital gains tax. Assuming it is taxed as an investment you would have to pay 100% of the CGT or 50% if you hold for more than 12 months, minus all costs associated with making the gain, ie fees associated with purchase, subdivision and sale.However if you are going to use the front property as your PPR then I am not sure, I still think they would get you, but more research required.
I am currently doing a similar thing in NSW on a corner block – a big learning curve.
We have bought a property & are subdividing for a dual occ. The original house is being rented out (we have done some minor reno’s) while we build the new house in the yard. We will sell the old house (probably)when building is complete & keep the new house for several reasons…
Better tax advantages (building depreciation)
Get better rental returns because it is new.
Less maintenance costs because it is new.
Cost of obtaining house is much less & property will be cashflow positive.
I am unsure of tax implications of Dual Occ (see my post on this in technical/accounting forum).Some things I have learnt to look out for when searching for suitable blocks is ..
Look for land that is above the gutter/road line and preferably sloping towards it (if there is a slope at all.Check with council about land zoning & also where the closest water courses are (you might have one running underground very nearby & not know it)
avoid blocks with large trees in the middle of them.
Check whether there are any sewer lines under your land & also where the closest electricity & water supply is (will they need to drill under a road to get to your property.
Some of the above issues can cost you a lot of extra money or stop your development in it’s tracks. Hopefully others on this site can add some more.
cheers
Thank guys for your replies. Notes have been taken and hope i can return the favour as i develop my own experiences. I have an interest in development and may pursue this in the future but for now i am just looking at onselling the sub-divided portion of land and leaving it to the new purchasor to develop. I am sure that even in this simpler venture all the information you have kindly passed on will be necessary for me to know and for this i would like to show my appreciation. I attended a seminar recently held by Dymphna Boholt in which she mentioned many strategies to investing in property, one in particular was about a friend of hers whom attained a block of land on an options contract in which he subsequently sub-divided into 4 lots only to onsell them within 3 months and aquired a whopping 1545% ROI. He now only follows this type of strategy apparently. She went on to mention that the builder whom purchased the lots made only 13% ROI. As this too is okay, to me developing just doesnt seem worth the time and effort. She provided figures to these stories which i just havent added due to length in dialogue. Maybe other people have had great success in this type of fast track sub-division and onsell in which i would be thrilled to hear.
Lionel Bocher
HI All, I recently subdivided a 1012sqm into two blocks, the old house was on the back, I built on the front. Ive posted the associated costs involved on another thread on this site, so if you search under my profile you should find them. I have also sent them to Calvin34 on a spreadsheet and he is putting in the formula’s so that they can be used by all. Good Luck!
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