The duplex was in Elizabeth South SA, and the area seemed pretty rough when I visited.
Rubbish and mattresses lying in the front yard of some houses, road signs being pulled from the ground, and the duplex had been broken into the week before with a squatter found inside.
Based on the photos posted online I thought a cosmetic renovation was all was to add a shower screen, bath vanity, and paint everything. It wasn’t until I inspected the property in person that I found that there were more serious issues with the property.
In terms of development potential, I visited the Elizabeth council with all the plans of the other development nearby and they said that was no problems at all, and similar dwelling could be placed on the site. Permission was needed to remove any trees with circumference of more than 2 metres though…
I was under the impression that you needed to live there at least 6 months continuously and had to have proof of being a resident e.g. Bills, and that if you rented part of the house you could only claim a partial CTG exemption.
Maybe main residence is different, but my guess is that if you do this multiple times, within a short time frame, the ATO may deem this as ‘Income Tax’ rather than ‘Capital Gains Tax’.
@terryw: I’m not ready to make an offer yet… Was just gathering information on how to proceed with the execution. I’ll probably have to contact the agent to find out more information about what the vendor’s needs are and tailor an offer to suit them. All I have is the form behind the property brochure, but it only gives you one option for offer. If I was to proceed with an offer, would attaching a cheque and date e.g. valid till 5pm Friday, be a good idea?
@pamela: I am just starting out, and have not done this before.
@richard Taylor: Doesn’t the Valuer only see the purchase price, and the front page of the contract? How would he/she know that the Vendor is reimbursing you for the cost of stamp duty and legal costs?
P.S. If you are wondering about the ‘inclusive of costs’ part I read it from the Siacci System:
“The $210,000 was actually inclusive of costs, that is, it included stamp duty and legal expenses.
The law simply states that when a title transfer from one person to another that stamp duty must be paid on that transfer. What the legislation does not stipulate is who must pay the stamp duty on transfer. So what we do is insert a clause into the contract that says that the vendor will pay the stamp duty on the transaction…
This is one of the clauses that we use for this purpose in our contracts
“The Vendor agrees to reimburse the purchaser the costs of stamp duty at settlement to an amount of not more than $XXXX.00″…
As you can see you are still paying for the stamp duty and legal fees but they are now included in your bank loan rather than coming out of your pocket upfront…
For valuation purposes it is important that you do not load the contract over and above the original asking price of the house”
Yes, I think $720k is an offer that the Vendor would take into consideration, as he would like to move on and focus on his hospitality business where his returns would be far greater.
The units are separated by brick veneer, and a local builder is confident that the floor is concrete – however the only way to be 100% is to pay the Surveyor to check out the property.
Anyways, its no big deal. I’ve moved onto a Duplex: Purchase price $255k. Estimated rent $200/week each side. Will live on one side while I renovate the other side, and could potentially add another $20-30/week.
So good cashflow now, and potential for further growth later down the track as the suburb is undergoing Gentrification and has been zoned Residential Regeneration Zone. Recently a Developer has been able to build 4 townhouses on a Duplex site similar to mine and sell each townhouse for about $300k.
I’m thinking maybe 3-5 years down the track I might consider doing the same thing or onselling the site to a Developer. Would you know roughly how much it would cost to build 4 townhouses on a 1200m2 block?
If the Vendor accepts the cash offer $720,000 there is potential for $420,000-$600,000 minus the other costs if sold. If not, then you’d end up holding units yielding +10%.
If the Vendor accepts Options offer, then there is less deposit costs, less holding costs, and more time to onsell the units, possibly no acquisition costs if all units are presold before option expired.
The $95,000 is probably at fire sale price, and more likely achievable price being $110,000.
Can you provide me with more information about the blocks you have strata titled in Brisbane please?
I’m interested in finding out more about the numbers involved.
The surveyor has recently replied to my email:
“Apart from our fees of $3800 + gst there will be a Land Titles Office fee of around $1700 for lodgement. Council will also likely have a small sealing fee/application fee for the strata (maybe allow $1000). I’m not sure where the $20000 figure has come from? The strata titling process is reasonably straightforward. You might have other fees such as building surveyor fees, etc but they aren’t directly related to getting strata titles. Regardless of the condition of the buildings, as long as they comply with the permits at the time of construction then they can be strata titled.”
Does this sound right to you? Strata titling for only $5,500 or is there something missing here?
I guess there’s not that much downside to just buying and holding the properties, especially since the area have 0.8% Vacancy rate, and only 30 minutes from the CBD.
The only problem is I don’t have the deposit, nor the borrowing capacity, and was hoping to gain control over the property with an option, strata title for maybe $50k, and then onsell them individually onto the market for a quick profit.
Considering that this block will require fire separation, and may cost $20k to strata per unit, might mean this deal might not be worth pursuing using this particular strategy.