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After further thoughr Xdrew, I am wondering how to achieve the $1M value for this land that you mentioned.
I've since discovered this comparable property:
http://www.realestate.com.au/property-residential+land-sa-willaston-200671327
6000sq m that brought $320K – around $50 / sq m.
I just emailed the owners that a more realistic price for the above land is $350K. (4000sq m @ $50/sq m + $150K for existing house)
No reply as yet.
Thanks for your thoughts xdrew.
I'm giving up on the retirement village idea and going back to the drawing board and spreadsheet.
As a result of your feedback I can see that my romantic intention to help prevent the elderly from being exploited by ruthless profiteers will not be applicable to this site at the sellers' asking price.
So now I'm thinking 2 storey courtyard homes or townhouses, as many as possible on the land.
They can still be New Age, so the market will have something that no one else is offering, and at a competitive price.
Thanks for putting me straight.
There is no way I can talk the seller down to $400K, so it makes absolute sense to refocus on to what the market wants rather than what I want the market to have.
Great.
Thanks guys.
Terryw wrote:There certainly is a risk.Speak to a lawyer about priority of interests in land. .
Terry, you've put me straight.
I'll forget about my devious plan and just plan on paying the obnoxious stamp duty. I think in the long run it will be less stressful than trying to scheme around it.
Thanks for your sound advice.
Catalyst:
Actually I misled you about the size of the land. It's 7000 sq m, not 2000. Sorry.
And it's vacant, so there's no issue with the owner renting somewhere else.
The value of the land is difficult to gauge. I first thought it was a good deal, but recently I discovered that Hickinbotham is offering a house and land package on 500 sq m for $221K. It's 4 bed, 2 bath and 2 lockup, 204sq m.
So to compete with that and still make a profit I'd want to be able to offer a better design for the same price.
I haven't checked out the cost of building a 204 sq m house, but it's got to be at least $150K.
So that makes their land worth $50K max.
On the block I'm looking at, my rough estimate of subdivision costs is $185K.
I want to build 10 New Age homes for a market where the competition is selling at $221K
So, land cost would be $295K + $185K = $480K = $48K per lot.
House construction cost, at $1100 per sq. m, would be 204 X $1100 = $224,400, say $225K
Total cost of house and land package is therefore $225K + $48K = $261K.
So my cost is $40K above Hickinbotham's selling price!
Either they got their land really cheap, or the Owner of the block I'm looking at wants too much, or building is cheaper than I thought.
Anyway, the reason it's been on the market for 2 years is probably because Owner is asking too much.
There's a lot to do in the subdivision. Council wants a road with kerbs and guttering, etc, etc.
O well, even if it doesn't go through, at least I made an offer. If Agent says Owner can live with the terms ther'es still time to explore further before I'm committed to anything. And even then, the commitment would only be $500 + my time.
But I'll certainly contact Hickinbotham and ask if they can build New Age houses for me when I find some appropriately priced land.
I subsequently heard Rolton in an interview, justify the refund ability clause by saying (words to this effect) why should I be penalised for trying to add value [through gaining a development approval] to the seller's property? He also claimed to have never had a a development application refused in his 11 or 12 years of operating in this way.
Hmm, can't imagine Rolton sending his boys round to wield disproportionate influence.
The clause completely removes any risk from the option taker.
What I meant to ask was how common it is for this clause to be included in option contracts?
Thanks Richard, I'll up on that idea.
New Age Property
Online
(Posts: 2)
I'm not a Massland graduate, but I do have a JV contract that I could let you have for $27.
It's quite comprehensive and runs to 26 pages.
I can send you a table of contents if you like.
On a side note to this thread, Richard, how do you find people who are willing to enter option deals with you?
Sell a few so that you can pay off any outstanding debt and live off the rents.
