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- ryan mclean wrote:If you just split the block you can sell off the land and then use the money to pay off your mortgage or to reinvest. It probably won't affect rent much. This is a great way to get a positive cash flow house, and to get your equity back out to re invest. Dual occupancy is good if you can build a house for cheap and it can really increase your positive cash flow. But you need to be willing to go through the planning and development stage of the process. It can also work to increase your overall equity which you can draw out to reinvest. If you have the money/borrowing capacity to create a dual occupancy, why not subdivide and build a house on the land portion? This might be a better way to add more value. The hardest thing is building the house, so why not subdivide anyway? Ryan McLean http://CashFlowInvestor.com.au Positive Cash Flow Properties Are Just A Click Away
Hi, My name is Julian. I'm new on this forum. Now to answer your question, Ryan.
What I'm about to do is 2 dual occupancy developments in Canberra on blocks right next to each other in a core zone. Understand, for my post, the costs relate to ACT dual occupancies.
I have looked into the new laws governing unit titling and subdivision. It appears that subdivision is a very expensive way to go, at least in Canberra. Not to mention the actpla experience. The betterment tax payable is currently 50% of the increased UCV from what I understand, and this is due to increase to 75% in June this year. This is crazy. So on each block if I subdivide I could pay at least $80k or more for each. There would also be ongoing fees payable. E.g: CGT, increased rates, land tax, etc.. Why subdivide? The only benefit I could see is if you wanted to sell one or both to take the added value. But true investors buy and hold. Think of the Monopoly game. You don't make money by buying & selling but buying and holding. I looked at all the possible negatives of subdivision/unit titling and they were heavy. It just makes no sense to subdivide here, especially if you intend to sell. In my case I will cop 150k+ in taxes and fees/ CGT on EACH block. So much for "affordable" housing the governments bragging about.
If I plonk a house in the backyard of each of these blocks which complies with subdivision requirements but I keep them on single titles and rent them both out, that is the best way. I'm saving a bucket load of costs and I'm still collecting full rental on the houses without additional ongoing costs like increased rates and land taxes and CGT isn't applicable if I hold. And in 10 years time I will be getting 1k a week on each of the 4 houses instead of 500 bucks with excellent capital growth.Thats just my feeling anyway.
