Forum Replies Created
Hi Ben,
As an update of today.
The owner brought the property in 2008 for 640, 000.
In 2013 market value it was 1.2 mil
2014 it’s value is of today 945, 000
Asking price 1, 090, 000
I just spoke to the owner a hour ago and needs to sell.
He welcomes any offers. Getting Desperate!
So yes throw a dart and negotiate from there.
I’ll start with 750, 000 and have it in his bank account very quickly if he takes that price based on the speed of delivery.
I would cut it into 4 x 100m2 DA approved lots to on sell to a builder.
A 100m2 lot is worth about 300, 000
300, 000 x 4 lots = 1.2 – 750, 000 = $450, 000
If only the seller settled on 750, 000 I would make a 450, 000 equity.
It would take my uncle only 6 days to subdivide the 4 lots. 1 day to move the house.
From yesterday to today the light bulb has come on.
But I’m still struggling to understand the details in the process. Start to finish.
Where do you start in the process?
Somebody please lay it out :)
Cheers
Cheers Ben,
Thanks for the tips!
I’ve got my area I want to target.
I found the street I want to work on.
I’ve looked at the future potential of the industry.
I’ve targeted my end users.
I’ve done the demographics.
I called an agent and they found my ideal property.
An old house with 936m2 block at market price 1,090,000
I found out that its a distressed property (Divorce settlement) Quick sale
Its also already DA approved with a development plan of (4) lots of 4×2 units. ‘The draft looks good’
The owner happens to already be a builder and hopefully I speak with him today.
I have two options here:
1 – throw an offer below market value $700,000 with $300,000 instant equity and demolition the old house subdivide and on sell the lots at $300,000 per lot to a builder. (the seller is motivated)
2 – Or I’m thinking do a joint venture with the owner where he builds the 4×2 units and somehow we negotiate a deal.
A 4×2 unit will sell for $800,000 per 1
Now because I’m a novice my thoughts stop here.
The first idea would be the quickest. Because I’m not a builder I’m not sure of the time frame.
If I was to go with the second idea how would the process go?
Do I try and pre-sell the units before I start the subdivision? how does this work and what would you do?
What’s the arrangements into putting this all together? what do I do first any suggestions?
There’s obviously a step by step procedure.
Do I secure the property first? how dose his work?
Where do I start?
Cheers
Granted :)Steve,
Ill be looking into it asap! From 0 – 130 (book) thanks!
My first idea would be something like this:
Purchase a block of land lets say 1000m2 then split it into two lots of 500m2, lets say for example I purchase the block for $350,000 in order for me to gain instant equity I would need to sell the new two subdivided lots for more than the purchase of the whole.
As I started to spell this out I think I just got it!
CHEERS!!!!
Granted :)If anybody has any life experiences of creating equity from subdivisions and don’t mind sharing, especially for the people who are interested in learning the process all will be appreciated :)
I have been granted unlimited finance from a family money partner based on one condition? That I create instant equity with a plan in place.
This is why I’m asking the question as I would like to use this strategy as my financial starting point for building capital.
I have a family member who has 40 years of subdivisions but no investing knowledge. (Drainage pipe layer & sewer upgrades etc)
We can put all he utilities in gas, Telstra and sewer etc.
But need examples and help with the rest of the process.
Cheers!
Hi Steve,
Thanks for replying to my question as I’m interested in creating equity in subdivisions.
Now that I know it is possible I will start learning more about the process.Steve wrote:
I think in this case you are asking how can I manufacture an increase in value by splitting one land parcel into two or more sub-parcels (literally sub-dividing). This is certainly possible and should be the goal of every investor pursuing this strategy.Yes Steve this is exactly what I want to achieve as you mentioned above.
As a novice investor where do you recommend I start to learn about this process?
Steve wrote:
Of course, you need to also consider what can be done with the land once sub-divided. That is, what sort of dwelling can be built on it, and whether that dwelling will be appealing for the target market you plan to sell to.Oh, and a final tip… in most jurisdictions you don’t have to wait for the sub-division to go through before you sell. In other words, you can normally sell with a clause subject to the sub-division being granted. Be sure to check with a lawyer in your area first though.
Ok Steve, so correct me if I’m wrong. What your saying here is that I can sell the lots before I purchase the block and subdivide it before I actually start work on the subdivision? Meaning pre-purchased lots.
I’m a little naïve and novice here.
Would you be able to give me a easy step by step example from start to finish of this process?
Sometimes real life examples seem to work better for me :)
Cheers
Hi Qlds007,
I’m interested to know more.
Do you have any example of a scenario that I could get ideas from?
And what would these relative costs be, I’m interested to learn the process.
Hi Qlds007,
I’m interested to know more.
Do you have any example of a scenario that I could get ideas from?
And what would these relative costs be, I’m interested to learn the process.
