I’ve been trying to find a development opportunity and have looked and spent many hours number crunching. eventually I found one and during my enquiries, according to the council and the town planner I spoke to, there’s a lane behind where I want to subdivide and they’ll allow road access and due to this, I can get 2 lots in the rear of the block, not the 1 I originally bargained for.
My figures to date are:
Purchase: $275000
Costs: $ 14000
Development:$ 14000
Connections:$ 8000
Removal: $ 5000
Loan (12mth)$ 18500
Rent income:$ 14500
Misc.: $ 10000
Other: $ 10000
TOTAL: $$340000I have put $20,000 extra in for unforseen things arising…
ON SALE
Sell both blocks of land at current land price for area for 600sqm at worst case scenario price of $125,000 = $250,000 (-$15000 costs)
Keep house for $100000 and refinance at 80% giving me $135,000 equity to use for more purchases.
OR
Sell house as well for $300,000 and walk out of there with $180,000.
The bonus here for me is I was prepared to go for this, getting $60,000 profit with only subdividing one block.
Now I know I haven’t considered CGT or GST at this time and these figures will eat into my profit margin,
Now I’ve worked out that I have sufficient money flow for the development, loan payments, insurances, council and surveyor costs. I need the money for the rest and need the finance.
..
The best thing is the real estate telling me they can’t get any answers from council about subdivision, where I was directed straight to the place and the plan and requirements and the planner reviewed the block layout with me and council gave me their suggestions and verbal, yep I’d be happy to support this, come see me with your drawings. comment.
The next best thing being the bonus lot that noone but me knows about yet.
[rolleyesanim][thumbsup2][thumbsupanim]
Any suggestions anyone. Anything else I should look for. I have put my offer in and it’s not far from the asking price.
I don’t think my figures are way wrong, but if they are I’d love a friendly nudge.
Sam
Good on you for looking for opportunities. We’re in the process of subdividing a lot (1 into 7) but be warned it may take longer than you’re estimated 12 months. Our DA took 11 months to process, and now we’re waiting on the Engineer to draw up the plans for the Development Permit.
Have you added in all Council contribution fees ? They usually ask for all drive ways to be upgraded also which will effect the house.
Otherwise sounds like you’ve done your homeworkAJBS
hi Samantha McGlynn
couple of things.
1. structure
If you are going to buy and sell or sell and hold the structure maybe different.
get some one else to check your figures and not a friend ( I prefer an enemy if possible but I’ve got a few of them, if you need I can spare a couple)
your idea is right but hold unless you have a project that you need to sell to get involved and even then I have my worries.
best is to sell to cover all costs or near to it and hold the rest.
I have not taken into con sid were these properties are.
if they are smack bang in the middle of melb or happen to be part of the sydney opera house foreshore then my assistance not advice would be to hold all as I would probably be one of those people trying to get my hands on it.
hope all goes well any questions fire away I’m a bit of a new recruit to developing but maybe able to help.here to help
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