My parents have recently been divorced and a property settlement is being finalized. As a result my mother will now own the former family home. She's not fit to work and essentially has no super, so I'm trying to find the best solution(s) to maximize the value of the home either to sell it or have it a source of cash flow.
Originally the house was in a residential zoned area next to a small newly built shopping center. That however was 25 years ago. About 5-10 years ago it was zoned commercial.
– The house is on 1/4 of an acre
– The house is only built on the first half of that 1/4 acre
– Currently valued at 550-600k
– The house is next to another house that was converted into offices for a few businesses
– The other side is a block of three units (same 1/4 acre size)
– New offices are also being built two spots down
– Close to buses and trainsanother potential problem is that apparently (from what real estate agents have told me) to get finance for a commercially zoned property you need around 50% deposit. I don't know how small businesses are going to find that which makes me want to offer vendor finance options
Hardly any of the houses on the street are actually houses anymore. However we do still have blocks of units.
So my thought is either it can be sold as a business/office or somehow make it dense residential, multiple occupancy etc…
In either scenario what options are going to work the best?
– Should I just subdivide and sell the back?
– Should I build a unit/flat at the back and convert the front to an office?
– Is renting the back out as storage an option?
– The front of the house faces traffic lights in front of a busy shopping center, could I put up a advertisement billboard?
– Is renting out individual rooms in the house a good strategy?Essentially what I am after is from an academic perspective what options would you consider? What's easy but low yield and what's more complex higher yield?
Thank you. First post.
Hi Matrix,
A piece of interesting land you got over there. May I ask whereabouts is this land? Which state and how far from the CBD area?
Depends on how much capital you have, it sounds like a perfect site for a mixed-use development. For example, you build shops on ground floor and residential above. Then sell the residential units to pay off the bank while keeping the retail for rental income?
It might not work out for you that way but it is just a thought!
Hi hrub,
Victoria, about 30k from the CBD.
My thought is that the demand is for businesses/offices since that's all that's getting built/converted around the area. The blocks of flats are the only residential that has survived the commercial development of the area. Everyone else has moved out.
On the other hand there's always people looking for cheaper commuter housing.
The house is a single floor house BTW.
I was thinking of building a structure in the back that could serve equally as either as residence or an office since I don't want to second guess the market. Of course subdivision might be a simple and quick way to squeeze out a little more money and make the first part easier for someone to buy.
Any further thoughts would be greatly appreciated.
Hi Matrix,
I'm based in Victoria as well, have done enough residential developments and am now looking at smaller commercial developments e.g. retail and student accommodation etc. I think commercial developments can be profitable if you do it right. Your land sounded with a lot of potential.
My suggestion is that you should still find a way to maximise your site, find a joint venture if your capital is low. Or even hold onto it for a little while and wait for your area to be better developed, you can use your land as a carpark lot in the meantime? Your decision should be base on availability of your local amenity e.g. parking, public transport and self storage etc. Try to provide your community with services that they need, price will only go up if it's in high demand.
I am aware that it depends on your family's agreement given that your folks are getting separated, but you should work out the best option for yourself (whether sell, hold or develop) then get your parents to come to term. But by reading your description, there's a lot can be done with your land.
If it is zoned commercial then I think the local council is trying to tell you something. It is probably ideal for commercial property.
Why not turn the home into an office and rent it out at such and then do something with the back yard. As an office doesn't usually need a large back yard it might be an idea to put another office in the back and rent that out for two incomes.
Go and talk to a real estate agent in your area and say you are thinking of renting it out (and thinking of using them as the rental manager) and you just want some advice on what is in demand in the area. Real estate agents are great sources of market info.
Ryan McLean | On Property
http://onproperty.com.au
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