澳洲Australia property Buying land for subdivision | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Hi all!
Recently i was talking to someone about how some property investors buy a large parcel of rural land in close proximity to a large town with the intention of subdividing and reselling.
I found it quite interesting and would like to know where the best place to start is to source information on the subject. I know of a distant relative that did this in Yamba NSW. Although he purchased the 100 acre lot 20 yrs ago, he had a road built and amenities to each block and is now selling the blocks for astronomical sums. It has made him a multimillionaire. I understand that he made his money on the purchase of the block which was 20 yrs ago, but im sure that there is still money in buying smaller blocks which may be divided into ie. 6 smaller blocks and have everything ready for a builder to just move in and commence building.
Anyways would love some imput and advice on where to start learning alittle more about this.

Regards
John  

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Friends of our family purchased a small hobby farm some years back with a view to living on a couple of acres and raising their boys. Then the city limits expanded out towards them. Their farm was rezoned from rural to resi and they became overnight, accidental millionaires by selling out to a developer. If you want to adopt this as a strategy on purpose, then you might have to wait for some time and of course the rezoning may never happen. This is pure speculation via landbanking.

What we've been doing a bit recently is buying a block - say around 1,200m2 with an older house on it. The house is then renovated for a bit of value add but primarily to increase rental yield. The rental income is used to defray some of the holding costs while the DA goes through to cut off the back yard to create another block. DAs like this can take 12 - 18 months to get through council, but the bottom line is that the older (renovated) house is worth virtually the same on a smaller block as on a larger one and the newly created block is often worth $200-300K in the areas where we've been buying......not too shabby for very little work IMO.  

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Yes that does sound like the way to go!

Thanks for the response Propertunity!

Yes buying a large block with an old house that can be renovated and then having the block subdivided is a great way to go. As you mentioned it could take up to 18 months to have approved and it would be great to have a couple on the go, but this will require alot of funds to hold.
Would you be living in the property while it is being renovated slowly?
Also once the block is subdivided would you sell the empty block to a builder to develop on, and would it be sold with plans to fetch that extra money?  

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JCM said: ↑
Would you be living in the property while it is being renovated slowly?Click to expand...
Noooooo. Slow renos while you live in the mess is a PITA. Just have all your tradies lined up for a day after settlement day start. A 2-3 week kitchen, bathroom, paint & floor sand is plenty of time. Then get it rented.

JCM said: ↑
Also once the block is subdivided would you sell the empty block to a builder to develop on, and would it be sold with plans to fetch that extra money?Click to expand...
Your choice.....not much in it either way.  

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Where to source more information on the whole subject matter?

Hi!
Thanks again for the informative feedback Propertunity.
I have so many questions about the whole process and would like to know if there are any guides or net sites on what the step by step procedure and costs is to doing a subdivision, also gain more knowledge on the whole subject matter.
I have over the last few years purchased a couple of blocks of land with old houses on it in the Keilor area and had the house demolished and built units on them with my builder friend. We both contributed to the building side of things but i left all the paperwork to him and so i now need to learn the whole procedure for myself.
I am now in the position of selling one of the units, and since i am no longer in a partnership, it sounds more practical and less work especially now that i am solo, to buy a house on a large block and subdivide and renovate the house. The whole thing is much less headache than building two new units from scratch as i had done previously.  

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Propertunity said: ↑
What we've been doing a bit recently is buying a block - say around 1,200m2 with an older house on it. The house is then renovated for a bit of value add but primarily to increase rental yield. The rental income is used to defray some of the holding costs while the DA goes through to cut off the back yard to create another block. DAs like this can take 12 - 18 months to get through council, but the bottom line is that the older (renovated) house is worth virtually the same on a smaller block as on a larger one and the newly created block is often worth $200-300K in the areas where we've been buying......not too shabby for very little work IMO.Click to expand...
Hi Propertunity,
1st Post, no property investment experience - be gentle!
Hope it's not bad etiquette to post a series of questions in one go and in one's first post. If so let me know and i'll learn for future.

Are there still opportunities like this around?
It would seem logical (to someone with no property investment experience like me) that sellers of such properties would realise that the best way to maximise sale price would be to hold, subdvide and sell - or is it just a case of so many props, so many sellers with different reasons/timeframes for selling, new zoning now allowing subdivision etc?

Is this the type of opportunity that you come across regularly with research in your line of work, or are they rare as hen's teeth?
When such an opportunity is found is there plenty of competition, pushing the purchase price up?

For your example above i.e to be left with a block with a sales value of $200-$300k, roughly what would be the initial property purchase price?

And rough subdivion costs?

Thanks in advance for any pointers.  

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pierso said: ↑
Hi Propertunity,
1st Post, no property investment experience - be gentle!Click to expand...
Hi pierso :)

pierso said: ↑
Hope it's not bad etiquette to post a series of questions in one go and in one's first post. If so let me know and i'll learn for future.Click to expand...
Ask as many Qs as you like.

pierso said: ↑
Are there still opportunities like this around?Click to expand...
Yes. I suspect it is a bit like when you buy a new car. You see lots of them around wherever you go. They were probably always there but you never noticed them before. ;)

pierso said: ↑
It would seem logical (to someone with no property investment experience like me) that sellers of such properties would realise that the best way to maximise sale price would be to hold, subdvide and sell - or is it just a case of so many props, so many sellers with different reasons/timeframes for selling, new zoning now allowing subdivision etc?Click to expand...
Many of these properties are deceased estates and it is just the beneficiaries cashing in. They don't want the hassle of developing. Lots of different reasons always, as you say.

pierso said: ↑
Is this the type of opportunity that you come across regularly with research in your line of work, or are they rare as hen's teeth?Click to expand...
It took me 4 months to find one that had $250K profit in it and 2 weeks to find another with over $100K in it. So between those 2 variables is usually what it works out to be. It takes a lot of searhing, you need:
1. Right zoning
2. Right slope on the land (for drainage)
3. Right neighbouring houses (to support reno on older house)
4. Right positioning of services
5. No easements affecting your plans
6. Right frontage, right size, etc etc.

pierso said: ↑
When such an opportunity is found is there plenty of competition, pushing the purchase price up?Click to expand...
It depends. Sometimes these properties sit there for 2-3 months with little interest and as soon as we arrive on the scene, other buyers start expressing interest. :p But, there is no point overpaying. At least if there is competition, we all know what we are prepared to pay and what kind of profit margin needs to be in it. Otherwise we all walk away. It is not an emotional game this one - purely the numbers have to work.

pierso said: ↑
For your example above i.e to be left with a block with a sales value of $200-$300k, roughly what would be the initial property purchase price?Click to expand...
#1 Purchased an older house on a 1,200m2 block for $365K. Spend $30K max. on a reno of the house. ($8K bathroom, $12K kitchen & appliances, $5K paint, $5K floor coverings)
End value of the house only, on the smaller block, would be $320K or perhaps a little more.
The newly created block would be worth $200K - $220K minimum.
Gross profit (excluding holding & sub-division costs): approx $100+K
#2 Purchased an older house on a corner block opposite riverfront for $580K
Spend $10K max. on a reno of the house for a small kitchen & paint.
Back yard is worth $300K as land only (after sub-division).
House would only be devalued by approx $30K by having a smaller yard.
Gross profit (excluding holding & sub-division costs): approx $250K

pierso said: ↑
And rough subdivion costs?Click to expand...
$18-20K av. and 12+ month's wait.  

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Thanks Propertunity.
All great info.

Are the two examples you quoted the result of you permanently searching for such opportunities for yourself across all of your stated areas of coverage, or only when asked/contracted by a client and for certain areas?

I guess what I'm trying to ask is .. If one wanted to do 3 or 4 of these a year, had access to the funds required and was happy to look in all areas (where the numbers and other factors add up) would it be possible to find enough opportunities bearing in mind that one will only get one's fair share?

Downside risks.. Off the top of the head as I see them are:
Reduced eventual sales price for house/block due to falling market, even sharply falling market - should be mitigated by gross margin added through subdivision?
Longer time on market for eventual sale of house/block - again due to market conditions - will result in increased holding costs and tie up of funds and therefore reduced opportunity to buy future properties.

What am I missing?

Thanks in advance again.  

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pierso said: ↑
Are the two examples you quoted the result of you permanently searching for such opportunities for yourself across all of your stated areas of coverage, or only when asked/contracted by a client and for certain areas?Click to expand...
Found when I was asked to find by a client.

pierso said: ↑
I guess what I'm trying to ask is .. If one wanted to do 3 or 4 of these a year, had access to the funds required and was happy to look in all areas (where the numbers and other factors add up) would it be possible to find enough opportunitiesClick to expand...
I think there'd be enough for you to find @ only 3 - 4 per year, no worries.

pierso said: ↑
bearing in mind that one will only get one's fair share?Click to expand...
I'm not sure what you mean by this.....nothing is fair.....just go get what you want.:p

pierso said: ↑
Downside risks.. Off the top of the head as I see them are:
Reduced eventual sales price for house/block due to falling market, even sharply falling market - should be mitigated by gross margin added through subdivision?Click to expand...
Correct.

pierso said: ↑
Longer time on market for eventual sale of house/block - again due to market conditions - will result in increased holding costs and tie up of funds and therefore reduced opportunity to buy future properties.Click to expand...
Correct.

I think you have to have a back up plan in case the market moves sharply against your position. Maybe this means holding & renting out for a while until market conditions improve. Maybe it means building on your newly created block.  

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Propertunity said: ↑
I'm not sure what you mean by this.....nothing is fair.....just go get what you want.:pClick to expand...
Yes, badly worded, what I meant was that others may pay more (buying as a ppor, willing to accept lower margin/more risk, see additional value i cant) or sellers will not accept my top limit offer in some circumstances, therefore possibly limiting prospects.

However your answer that 3 or 4 a year is possible covers all.

Many thanks for all your answers - most helpful.
PH  

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propertunity, being from melbourne, the suburbs you mention are a bit hard to get the feel of.

when you say 1200m2 plus, what sort of suburbs are we talking about in melbourne, eg ballarat or even more regional then that?  

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