Hey guys i have been doing a lot of reading but struggling to find a similar circumstance, would appreciate any help/advice.
Thinking of buying a 1100sqm block it is zoned r40 and the current owner has had plans for 3 units (strata survey block) subdivision approved
by the council but has not lodged the papers. My idea is to buy the block and build the front house as per the surveyed plan of the strata survey block. To make it my primary residence for a short period then go ahead with the subdivide and sell the front block with house, hopefully leaving me with enough equity in the remaining 2 blocks to get the required funds to build the last 2 houses at the same time.Are there any serious flaws in this plan? Will the front house be cgt free? Where does gst come into play with developing the block?
Thanks in advance for your time!
James Hurn
Are there any floors in the plan?
Potentially you could pay considerably more by building twice. I'd recommend you sit down and do the sums a couple of times in different ways – after all, what you are talking about is an issue of timing more so than exposure or aggregated lending.
As for GST, it comes down to GST in/GST out, in accordance with your intentions. You are talking about developing for a profit so there is a little potential to exploit the GST in the short term to aid cash flow.
I definately cant afford to build all 3 at the same time, i see the block as a good investment and i am trying to come up with a strategy that will allow me to make it work within my means.
Hi James,
I'm not sure if you have done this sort of thing before, but if you are intending to be a property developer you really need to treat it like a business and consider how much time and money (yours and the bank's) you need in order to generate the profit you are proposing. Have a plan that sets out what you want to achieve and how you're going to get there.
It may be that a long process is best. It may be that a short timeline is best. have a think about your own motivations rather than the opportunity the block presents. This sort of project is a major commitment of resources (especially time and money) and should be done with as little emotion as possible.
Hope it works out for you.
If you’ve found a project that will work but don’t have the equity / cash flow then maybe look for a business partner who can help you out.
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