Advice Needed - How to best navigate this scenario

Hi all,

Seeking some advice on how to work through this opportunity.

Property in question is currently a single dwelling property with plans and permits to build two dwellings on the rear.

We have an opportunity to purchase the property/allotments at a favourable amount. The current owner has plans in with the council for subdivision for two at the rear. He is now needing to sell up. He is unable to build him self.

We were originally looking to purchase 1 allotment each (me and my father) and complete the build ourselves. However, our respective banks will not fund until subdivision has occurred which could be months.

We have the opportunity to purchase the entire property, and subsequently begin the development at rear. The challenge here is the total finding required.

I would expect this to be a common scenario and hoping to understand how best to navigate through this.

Thanks in advanced

 

Is that the only challenge though? You're basically signing up to become a property developer and all the costs and risks associated with that. It's not some small thing! Do you have property or building experience?

 

Are you sure he isn't selling up because the sub-division wasn't approved?

If you need funding from the banks to build this you'll be classed as owner builder and therefore funding would be limited to 60% of the Finished value.

What usually happens is, get an 'as if complete' valuation based on fix price build quotes, approved plans and specs and the bank will base the loan to value ratio off that end valuation. Can do one at a time if separate titles, subdivision will need to be completed first to do it that way.
Best you speak to a broker about your options instead of just the one bank.

 

Many people sell with a DA that isnt viable because they personally avoid the risks and costs (like GST) and then the next mug gets stuck with all the risks of issues and rise and fall in costs and value (perhaps rise of costs and fall of value !!) and finds they cant make a $$$. Thats why they sell. If profit was so guaranteed I would argue they would have done this.

Our developer toolkit addresses some of the key tax issues to consider. Undertaking a 2 lot dev isnt as profitable as many think