Hi guys
I have spent the last few months thinking about and planning a property investment strategy.
Specifically I would like to buy a property that is situated on a large block and add value to the house with renovations as well as sub-divivde the block into 2 seperate titles.
1) Has anyone done something like this have any advice for me before I get started?
2) Any suggestions on time frame for council to approve a subdvision?
3) Is getting ‘early access’ to the property usually a problem?
4) Is it only possible to get the ball rolling on subdivision once settlement goes through? It would be nice to get a long settlement (say 100 days), renovate and subdivide and then try and to sell on ‘settlement’date.Any advice would be greatly appreciated
GabboHi there Gabbo,
1) I haven’t done this myself although have looked into it a bit, hopefully, someone else will reply that’s actually done it, but here’s what I found:
2) How long the subdivision may take varies depending upon the council and what else is happening in the area. One area I looked at, the council said it usually takes about three months for them to approve, however a real estate agent in a different area advised that approvals by that council were taking anywhere up to 12 months and that they weren’t approving anything that became a “battleaxe” block, they wanted roads put across the back of blocks that could be subdivided to give each block a street front. This then added to the costs of subdividing and the need for the house before yours to be bringing the road past their home. Believe this is unusual but pays to talk to the council in the area that you are considering and find out what their expectations are.
3) Early access to a property – this I have done more than once, but ususally works best where the home is already vacant and I usually put on the contract that I want access once finance has become unconditional. This gives the seller reasonable piece of mind that it will be going ahead. Having said that I don’t usually do anything strutural prior to settlement in case some sort of problem occurs but can arrange any quotes etc I need prior and have it all set ready to roll upon settlement. Also make sure all your other conditions are met prior to taking possession ie: termite inspections done etc. Once you take possession you often lose the safeguard of these things so get them done first.
4) You could put the sudvision clause as part on the contract ie: that the sale is subject to subvision being approved. However they may not then give prepossession until this point otherwise your in the house on a contract that could fall through if subdivision doesn’t occur. Also you may need to have them sign the paperwork for the subdivision as they are still the owners, if this is the case you’d need to include this into the ocntract as well.
Perhaps others can shed more light, but that’s my two cents worth, good luck.
PK
I do this and there is quite a few things to consider.
Time is never correct. Council say they take 3 weeks and then do it 9. Or 3 months and take 6.
Early access for subdivision is not necessary. You only need a survey to measure up to subdivide and then you start on plans. Getting the concept right for council is always painful. I would only be requesting access to commence renovations.
I would suggest 100 days is not enough. I have done it recently on a 90 day settlement, i settle next week and council still have not received my official plans as they can’t agree on the dam concept plan first.
Too subdivide and sell you would need more time and then luck to have everything go right and on time. To buy and renovate is completely different as it all rests on you and doable in the time frame, although I don’t believe you could renovate and sell in 90 days to settle on the same day you are settling.
It is something you need to do to see how simple it is, just frustrating. Requires patience and passion. The buy renovate/subdivision is great money wise, but timing wise, always a tricky one to predict.
Well that is my personal experience anyway.
Byronent
Adelaide SAHi Gabbo,
With early access, be aware that if you make improvements to the place and then for what ever reason can’t go through with the purchase then you lose and the vendor wins (maybe).
If you make improvements and the vendor pulls out then you need to make sure you will be compensated.
Your solicitor will be able to advise you on this, otherwise do what purplekiss suggests.
Regards,
Ian
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