All Topics / Help Needed! / First time investor

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  • Profile photo of prophecyprophecy
    Member
    @prophecy
    Join Date: 2005
    Post Count: 5
    March 30, 2005 - 12:41 pm

    [biggrin]Hello everyone in computer land….
    just after some feedback…

    i have an idea to purchase a property with the possibility to subdivide…

    because i have next to nothing i would like to secure a long term settlement period so that i can get the subdivision through and also hopefully have minimal money down…

    can i subdivide and sell the vacant land while still in settlement period?

    what would be my options in order to cover the costs of the property at the end of the settlement? for example should i arrange to buy the property and on sell to the next buyer at the same time…just do a money exchange with none of my money and keep the vacant land???

    i know this is very basic and in the air but any info or advice would be greatly appreciated…

    i’m very keen to get started and i think this would be a good way to create some cashflow…

    thank [biggrin]

    Profile photo of XeniaXenia
    Member
    @xenia
    Join Date: 2002
    Post Count: 1,231
    March 31, 2005 - 6:24 am

    Hi Prophecy,
    I think subdividing and selling off a house and block of land is a great way to get cashflow.

    just some suggestions?
    not sure what state you are in, but some councils can take months just to pre-approve a subdivision after a surveyor has submitted the plans. you need to factor in this time when negotiating a settlement period. It may also be helpfull to make the contract subject to this pre-approval.
    subdivison can also be a costly exercise and you may need to pay for it before the land or house is sold. You can sell the land before settlement, but I think relying on this sale for finance is risky business. Also Not sure what type of land you have, hammer head subdivisions tend to take longer to sell than corner blocks.

    The biggest piece of advice I can give you about these types of deals is ALWAYS BUY UNDER MARKET VALUE. We always try to buy 20% below or no deal!!! especially in a non booming market like we have now. this gives you a buffer zone incase of unexpected expenses or if you need to hold the property longer than expected.

    All the best, if you go ahead you will learn alot from it!

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