Hi just wanted to get some opinions on subdividing back block.
a) Would you sell and take profit
b) Build house and sell and take profit
c) Build house and rent out for future income
The reason is that I may need some cash for a future venture but not sure what I should do.
Thanks
another option D could be, subdivide, find a builder, get some plans and also get council approval and then sell "off the plan" as house + land. or even move into the new house yourself and rent out old house.
if you do option D, you still have the option of listing it as land only, or weith council preapproved plans for a good profit. plus that way you can control the house design and ensure you're happy, as you'll be close neighbours!
i'm sure if you can afford to hang onto it you'll have a better outcome by building yourself and renting it out, enjoy the growth on it and if its a good investment by the time the house is built there should be instant equity in it which you can then refinance and obtain for your other future venture.
Thanks Wisepearl I believe once I build it I should be able to hang onto it via the rental Income.
Hi PE,
I'm not sure how financially savvy you are, but a more systematic way of assessing the different options would be to do a simple cost benefit analysis (or more sophisticated NPV). These are some of the techniques used by business to appraise long term projects in terms of their profitability and feasibility – as finance is a scarce commodity, they want to make sure they get the maximum return and minimum opportunity cost (trade off)
Essentially, that should be no different to you, as it is an important business decision. Personally, I find different location will produce a different outcome. Some location will have higher unit sale price (hence you would build), some location demand quality units (which increases cost, so you may plan and sell land). You really have to know your market and targeted buyers.For more information:
Cost Benefit Analysis
http://en.wikipedia.org/wiki/Cost-benefit_analysisNet Present Value:
http://en.wikipedia.org/wiki/Net_present_valueGood luck
KennyI am currently going through the motions on my IP. 1000 sqm corner block with room at the back. My goals lean me towards keeping it after the house is built.Reason being its total rent return after the build is 50% of what i would be happy to retire on.( It has a granny flat also).
So one more property like this and one ordinary one for expenses would have me retired.2 dual oc and 1 normal property paid off and im done.
Anyway thats me and thats why in my situation i would buy and hold.
But also as you touched on it should provide instant equity which would be a good safety blanket or something you could axcess for your next build.
Guess it depends on the numbers in the end.
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