Hi help needed, we currently have a 680 sqm block with an old fibro house on it, we bought it for $510 in Sutherland Shire, our mortgage is approx $469k, if we renovate we may spend about $50-80k DIY to add $150-200k value according to recent sales in the area.
But, should we borrow another $300-$400k and build a dual occupancy, if we do this we have to take into consideration renting a house while the build is on and either sell of the plan or wait until build is finished, local sales for new duplex are approx $550 – 580k
1st option
469,000 + 80,000 = 549,000 (if sell for $680,000) profit $131,000
2nd option
469,000 + 350,000 = 819,000 (if sell for $570,000 each ) profit $321,000 less cgt and rent
which would be best option? Will a lender loan for a knockdown/rebuild?
Really confused.
Am I completely wrong, head in the clouds, anyone????
It could take 18 months to sub divide and construct another dwelling.
If you borrowed the money to cover the $469,000 you have to consider holding costs (interest of $469,000) plus $350,000 (2/3 interest costs over 18 months on construction loan) plus cost of submitting DA planning permits,connecting services (power, water, sewerage).
You need to research the cost of Architect/ designer, Construction cost from builder and Surveyor, submitting plans, connecting services, landscaping.
At a guess I would have thought 50k profit on renovation or subdivide
and 100k profit on subdivide and new dwelling at back.
You would know a little bit better with finding out the costs of subdivision and new dwelling.
Also you need to factor in Sales Commission and GST on a new dwelling 1/11 of sales price.If the Fibro turns out to be asbestos you will have to pay to have it removed by an asbestos removal expert.
if you remove the sheeting or demolish house. Demolishing the old house has a cost also if you decide to build a new building in its place.Thanks Duckster, i wish i had a head for this stuff.
so much to learn!
Why not subdivide the back and sell with DA to build a townhouse whilst renovating the front? Your outlay is minimal and your gaining an extra piece of land ready for someone else to buy and build on.
You want the most profit from the least risk, effort and stress. You'd be looking at 4-6 months usually for the DA. You can comfortably do a good reno in that time.
My thoughts anyway.
Sash
Want it. Own it. Enjoy it. Achieve it.
Thanks Sash, great tip, I will see town planner to see if its all feasible.
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