Best way to consolidate with neighbour to create 1380sqm site suitable for multi-unit/townhouses

katbaloo · 2nd Aug, 2017

Hi, we are in Canterbury council area on a 590sqm site, R3 zone. Our neighbours have a 690sqm site and we are aware they may be selling in the future. Their site, however large, has a very narrow frontage and prohibits anything other than a single dwelling. However combined, our two sites would meet the frontage requirements for multi unit housing or attached dwellings. Combined site area of 1380sqm, FSR 0.5:1.

Their site has a much higher value to us than to anyone else. My question is in order to consolidate and sell the combined site to capitalise on this added value, would we be better off to buy their site, then sell the two lots together, or sell at the same time as them? I would think buying their site lets us gain from the uplift of combining the two...but would the added costs of buying then selling offset this gain?

And who would we be selling to? A builder or a developer? Through a normal real estate agent? Any advice much appreciated.

Thanks!

Tonibell · 2nd Aug, 2017

Just buy it - big opportunity, 1 + 1 = 3.

Strategise so you don't overpay - but make sure you get it.

Find what a 1380 R3 site goes for and the answer will be clear.

katbaloo · 2nd Aug, 2017

Tonibell said: ↑

Just buy it - big opportunity, 1 + 1 = 3.

Strategise so you don't overpay - but make sure you get it.

Find what a 1380 R3 site goes for and the answer will be clear.
Click to expand...

Thanks Sorry to be a dumdum but how do I find that out? And we we to sell development sites like that do you just go through a normal real estate agent? thanks again!

Tonibell · 3rd Aug, 2017

To get comparatives you can search for sales listing and previous sales from realestate.com and similar sites.

That will also tell which agents handle those type of blocks - then you talk with a few agents, lots of talking.

We have done something similar in Brisbane but are holding it a while and trying to pick up one further block.

You can put a lot more on a 1400 m2 block compared to 2 x 700 m2 blocks of the same zoning due to saving the setbacks - becomes more significant the higher you go.

wylie · 3rd Aug, 2017

If you can afford to buy them out, that would give you a profit (hopefully - depending on many things).

We've done the same thing. Bought the neighbouring block to give us a development block. But there is work to be done to create the block, so whilst it is not "free" it is a very cheap way to get a building block. And our holding costs are "zero".

And more recently, another IP neighbour contacted us to see if we wanted to sell together to a developer.

We cannot borrow (retired) so buying them out is out of the question (without selling something else). So I called an agent I know who helped us with the development block to see what we could sell them for as a development block.

Nothing will come of our situation because our neighbour thinks his house is worth maybe $1m+ (it is worth about $820k). And he thinks he will get an extra 30% to 40% premium by selling with ours as a double block.

His house must be retained and ours can be demolished, but the one offer that was floated (by a cheeky developer/builder) was $1.5m. That is about what the blocks are worth "as is" if sold separately, so that was likely an early, cheeky "try on" offer that would likely be increased, but not enough to satisfy the unrealistic expectations of the neighbour.

I'm sure if we marketed them together, we would get higher offers, but the neighbours think their own house and block is worth $1m+ plus 30 to 40% on top of that - clearly unrealistic.

If our house and block is worth about $770k then you can see their expectations are way too high and they will likely just sell to a family who wants the house "as is".

katbaloo · 3rd Aug, 2017

Tonibell said: ↑

To get comparatives you can search for sales listing and previous sales from realestate.com and similar sites.

That will also tell which agents handle those type of blocks - then you talk with a few agents, lots of talking.

We have done something similar in Brisbane but are holding it a while and trying to pick up one further block.

You can put a lot more on a 1400 m2 block compared to 2 x 700 m2 blocks of the same zoning due to saving the setbacks - becomes more significant the higher you go.
Click to expand...

Thanks very much for the advice!

katbaloo · 3rd Aug, 2017

wylie said: ↑

If you can afford to buy them out, that would give you a profit (hopefully - depending on many things).

We've done the same thing. Bought the neighbouring block to give us a development block. But there is work to be done to create the block, so whilst it is not "free" it is a very cheap way to get a building block. And our holding costs are "zero".

And more recently, another IP neighbour contacted us to see if we wanted to sell together to a developer.

We cannot borrow (retired) so buying them out is out of the question (without selling something else). So I called an agent I know who helped us with the development block to see what we could sell them for as a development block.

Nothing will come of our situation because our neighbour thinks his house is worth maybe $1m+ (it is worth about $820k). And he thinks he will get an extra 30% to 40% premium by selling with ours as a double block.

His house must be retained and ours can be demolished, but the one offer that was floated (by a cheeky developer/builder) was $1.5m. That is about what the blocks are worth "as is" if sold separately, so that was likely an early, cheeky "try on" offer that would likely be increased, but not enough to satisfy the unrealistic expectations of the neighbour.

I'm sure if we marketed them together, we would get higher offers, but the neighbours think their own house and block is worth $1m+ plus 30 to 40% on top of that - clearly unrealistic.

If our house and block is worth about $770k then you can see their expectations are way too high and they will likely just sell to a family who wants the house "as is".
Click to expand...

That is unfortunate. In our case the neighbours are really elderly so thinking it's a matter of time

wylie · 3rd Aug, 2017

katbaloo said: ↑

That is unfortunate. In our case the neighbours are really elderly so thinking it's a matter of time
Click to expand...

To be honest, I don't mind at all. Our house (if bulldozed and built to the highest it can go) will get a much nicer city view (currently has a view if you stand on the back steps, city views were not sought after in the 60s), so we plan on holding long term.

Jmillar · 20th Aug, 2017

I would try buy it directly from your neighbour.

If unsuccessful and it goes to market and you're going to buy it, get someone to bid/make the offer for you so the agent/neighbour doesn't know they're connected to you. And tell them you're not interested. This way they won't expect to get a ridiculous premium and will be more realistic. Then your friend 'buys' it and the Vendor don't know you actually bought it until your name goes on the contract (or better yet, an entity unknown to them).

This could save you a lot of money...

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