We have just purchased our first real active investing property where we will be turning a 2 bedroom house into 3 and then subdividing the block at the rear.
Still not 100% on whether we will just sell the blocks after subdivision for a bit of quick cash to keep the ball rolling or build 3 units that will keep us tied up capital wise for a few years.
We have done all our homework and have a green light from council so it will be full steam ahead after settlement.
Does anyone have any dos and donts or common pitfalls from their previous subdividing and reno experience? We would love to hear them
Hi Adnie,
Just an overall “common pitfall” (not from any subdivision experience at all) – and that is to ensure you retain sufficient Cashflow, or at least cash to tide you over any rough times. The words “tied up capital-wise” sound a bit like it could be a struggle (??)To that end, I would suggest erring on the side of caution, depending of course on just how much free-board your business has. If nervous about maintaining cashflow, go the “quick cash” route. You can always make your big money on the next one.
Benny
Hi Benny,
Thanks for the input!
We have decided to take our investing down a different path than we have been on for the last 3 years, we are now primarily looking at value add properties only and are in the process of selling our other 2 buy and hold properties.
What I meant by tied up capital wise was that if another great deal was presented to us we wouldnt be able to take it as we would have most of our investing capital secured in building units, which I don’t think is a very wise move this early on.
We have decided to just reno, sub divide and sell so we can move onto another project and then later down the line we can commit to bigger projects that require a longer time but for more reward like you said. :)
Ah, that sounds better !! No dramas after all. So, if selling your buy-n-hold properties, is this to be “as a business” from here on, or are these just clearing the decks to start a business?
Benny
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