Hey everyone,
My partner and I are looking at building an IP in Estella in Wagga Wagga NSW and then leasing back to DHA. They have just released a new subdivision there and the blocks are selling so quickly as land is hard to find in Wagga at the moment. It is very close to Charles Sturt University, a primary/high school and 5 min drive to CBD. They are also plans in place for another possible school site and some commercial developments. The suburb has easy access to public transport via bus. My question is I have found a 830 sq m block and I can get it for $95k however it is a corner block. In comparison to other blocks left for sale – 850 sq m for $110k and 745 sq m for $105k and lastly 665 sq m for $100k. This property will be an IP for at least 5 years + and I was not wanting to pay an extra $15k if it was not going to be of a benefit as the build is going to be expensive. The block is currently on hold at the moment and we did not need to put down a deposit until we are happy with plans etc. It has a street frontage of 52.5 m which is significantly larger than other blocks as it is on a wide curve.
I would really appreciate some honest opinions before we decide to proceed with the block or not. If anyone has used DHA for leasing I would be interested to hear how you went.
Thanks in advance.
Jacqui
Call the council planning department and ask what the minimum block size is for the area, for the purposes of subdivision. A corner block of this size is wonderful, because if you split the block in half, the two resulting blocks will each have a street frontage. You could then:
1. Sell the two blocks off for a profit
or
2. Get planning permission to build on them, and sell them with the permission in place (adds some value)
or
3. Build on one, sell the other
or
4. Build on both, keep one house, sell the other
or
5. Build on both, sell bothThere are also options of building smaller dwellings (eg thin 2-storey townhouses; or single storey units), but run the numbers to see which is most profitable.
Corner blocks are ace!
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Corner blocks are fantastic……. However in light of your DHA Lease back scheme…… DHA I am 90% sure have certain requirements for yard size private areas etc they even go to the extent of having so much metrage of clothsline. You may want to check that out with them if you are still keen to lease it to them.
If you are able to subdivide but DHA don't accept that I would be sticking with the subdivision.
I called DHA and they dont really like corner blocks. We have decided against it for what and have chosen another block which is acceptable for DHA and has good views.
Thanks for your helpful comments
Have you run the numbers on DHA investing? In other words, is the return on investment sufficient for you? If not, why would you buy a property that suits them and only them?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi JacM,
The property we are building is a 4bd, 2 bath, 2 garage house on a 796 sqm block and at this stage we will build it to DHA's standards however there criteria is really no different to how you would normally build the property, just a few minor details to alter. It really does not add to the cost at all. We are eligible for the NSW stamp duty concession as we are building a new property under $600k which means the house we are building is practically the same cost as a 15 yr old property in the same suburb. The return will be less than if we were to lease it through a property manager however my partner and I liked the idea of once it was leased to DHA you were guaranteed market rent from the day they sign the lease – A normal term is 6 years + with a 2 year option. They conduct independant annual rent reviews and at the end of the 8 years they do a full internal repaint. They may request a option to take an a further year and which would bring it to 9 year lease and then they do a full external repaint and recarpet. The management fees are double in comparison to a REA however that takes care of any repairs which a PM would call you to fix anyway and the fees are also tax deductible. The reason we are considering this option as it was particularly safe and convenient for our situation as we plan on moving interstate and renting and we did not want the finanical stress if our property was untenanted for a period of time as I also have another IP which would be leased. We may even plan to move into the property in 10 years or just continue rent ingout as an investment. We plan on balancing out our portfolio with a more positive cashflow property in a 1-2 years.
JacM – what type of property investing are you into?
jacqui
Residential. Preferably property that provides something extra such as subdivision potential
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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