Hi guys, this is my first post, just hoping for some wise, more experienced thoughts on this matter. Hubby and I are in the throes of purchasing a 3 bed brick home on 3 acres, 2 road frontage, 15 mins from large Qld country city. Local council has said block can immediately be subdivided. The surrounding township is made up of 1 acre blocks or smaller, and majority of new development in the area is 1/4 or half acre lots.
Hubby and I plan to split it into 3 x 1 acre lots, and then build two homes and sell the new homes off. The purchase is being put in a family trust. We envisage the sale of the two new homes will result in the original home being debt free and tenanted, resulting in around 220pw +ve.
Our concern is that we are hocked to the eyeballs…well, maybe the neck…to do this. Purchase price is 230k, rent should be 250pw til subdivided then 220.
Any wisdom from afar regarding hidden dangers or thoughts on this proposal would be appreciated. We are very new to the subdivision/development scene.
Thanks,
Redhaven
Redhaven,
I’m a surveyor in southern NSW so I don’t know what they do in Queensland but, I might be able to give you some advice regarding on what I do here.One cost allot of people overlook is the putting together of the development application. Rural res approx cost $10k this includes 6 consultants studies (survey design, flora and fauna, water, effluent,fire and archealogical). On a simple 2-3 lot subdivision I tell them to budget on 40-50k develop costs. (this comes from previous clients)
What I offer to clients is to organise all this so all they have to do is come in and sign and pay for it. You might find someone up there to do something similar.
Road building is very expensive(approx $400k/km) so you want to design it so minimal road building is needed. I don’t know if you have to supply sewer and water, but it sounds semi-rural so the buyer would have to put in a septic/envirocycle system and water tanks.
Down here water is the biggest problem with subdivision and putting in dams and bores is very hard, normally we create easments and share.
Sorry if I’m rambling on, but one more point I would consider is possibly maximising your block yeilds.ie. 8×1/4 blocks and keeping your 1 acre or 12×1/4 blocks built up around the existing house. It would depend on the figures etc.
hope that helps[cap]
Thanks for the substantial feedback. I appreciate your time. I spoke to a surveyor up here prior to reading your post; it’s $200 to do the prelim draft for council, and if they agree then it’s $2000 to do the subdivision and have the pegs etc done, and the 3 titles done. Maybe I have my head in the sand here, I will check and verify these prices are conclusive and comprehensive!
As far as roads are concerned, it has two road frontage back and front to a bitumen road, with power, water etc right there. With the access road from one side of the block to the other, I simply planned to do in a decent quality gravel, like most of the surrounding homes have. It is a semi-rural township. It needs a 40m frontage for each block and ours has 50m one side and around 70 the other side, so I thought it feasible to do two battleaxes down the back, one with access from the back road, the other from the front road.
I appreciate the idea of smaller blocks, but the standard around is generally, in our street, 1-3 acres, although major subdivisions going in around abouts, are anything from 1/4 up to 2 acres. It’s worth checking out, so thankyou, I will enquire at the council.
Anyway, this is our first time out on developmental waters, and at the time of my post I was hoping and praying we really were doing the right thing. Since then have spoken to our legal and financial advisors who have assured us this is a good move.
One thing we did decide to do was buy in a family trust name which our accountant has applauded.
Thanks again for your advice, it is appreciated.
Red.
Hi Redhaven,
Happy my feedback helped. Just to let you know if you can get the Surveyor to do the Subdivision for that price hurry and sign him up. In my area I would charge double that. Watch out for all the other costs such as lodgement fees etc that will add up if you haven’t budgeted for them.
cheers GQ
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