Bought From A Bankrupt Builder In Beachside WA - Now What?

@Comrade 1984 - have a chat with your accountant as well, if you are registered for GST it may be able to be argued that you're buying a going-concern @Terry_w or @Paul@PFI might be able to clarify if this would meet the requirements of the GST Act.

 

Thanks Scott. You and others are a mine of information!

 

It's amazing how regulars on this forum have managed to figure out the property I am referring to. I will get around to posting the link once settlement is over and done.

 

This is Perth. There is one degree of separation for everything
The people you bought it off paid $325k in 2015 and built the 2 villas so you are doing HEAPS better than they are and they got it for half the price that the 2006 paid of $730,500. The people that actually made money from the site is the people who bought it for $125k in 2001 and sold it in 2006 for the $730,500 - I hope they invested that windfall wisely and still reaping the rewards off it.

Your blocks probably has a land value between $150-200k if we use that other block as a comparable. The cost of constructing the 2 dwellings was probably around $350k-ish so you are doing well on the buy. You just need to be careful of what your next steps are

 

Good friends of mine had a nearby quarter acre site (a couple of streets closer to the foreshore in R100 zoning) that they bought for $160K in the 90s. They sold it for $1M in 2007 with a knock down house on it. Talk about timing the maket.

Mandurah will have it's time again, so much good infrastructure and development of public spaces has occurred over the last decade and it's natural features are amazing. These central development lots have potential to do very well when the market turns some day.

 

Without having done more than 5 minutes research, Mandurah is not Wollongong or Gosford (though about the same distance from the State captial), it doesn't have the same population base as the eastern states and by the sounds of it is so oversupplied with medium density zoned land. It does sound like some great planning for the future 50m Australia but we need to get people and jobs over there.

 

Now that's really something! Superb timing! Back in the 90s folks may have said your friends overpaid and they no doubt sweated on it for a few years until things turned around. I wonder what the same site would be worth in today's current broken market?

 

Gedankenexperiment

If you paid $100k for a 8 unit site. Can you build 8 units and sell at a profit?

Property is cheap in Methdurah

 

The council went nuts with the high density zoning in central Mandurah, but nobody seemed to comprehend the huge oversupply until the bubble burst in 2007, and now the medium and high density market is destroyed. Add to that the general 30% price decline the local market has copped over the past few years - yep property, especially units, very cheap.

Meth issues in the sketchy areas of Mandurah are no different to other rough suburbs in Perth. Unfortunately OP's new purchase is within one such sketchy area.

 

Yes why high risk today

Though when we were playing in Mandurah in 2001 the beginning of the boom it was nuts

So much competition, investors around Oz were buying up
we were buying land without titles for $150k and when titles came in the blocks were worth $300k in a 6 month period ....I kid you not
These were also the days where we had lo doc/no doc so you just kept buying as prices kept rising all you needed was equity

Some companies got to a point where they would only limit 1 block per investor

Then it all came crashing in 2007, I imagine lots of investors lost their shirt

 

Either that or they're holding up their trousers with string as they haven't crystallised the losses and sold. Probably still holding exhorbitant debt on the original IO loan too.

 

Now all interest and principal

 

At least they still had their undies.

 

I’m in the Northern suburbs of Mandurah myself and can say the whole stigma Mandurah has developed comes from the inner part of town around Mandurah, Coodanup, Greenfields, Dudley Park minus the Canals, Although the north of Mandurah has seen a bit of an uptick in the same social economic issues from the new cheap development in the backside of Lakelands and Meadow Springs.

 

Yep when it comes to Mandurah, I think my general advice to somebody unfamiliar with the place would be to keep it within 1km of the beach or Estuary (excl some central mandurah areas) and it'll be a great family-friendly safe location. Straying further afield and you have to pick your street, and straight up avoid those sketchy central suburbs. But to be honest, apart from maybe Coodanup and a handful of streets in Greenfield and central Mandurah, even the sketchy areas of Mandurah are still better than places like Kwinana or many SE Perth suburbs.

 

@Comrade 1984 - How is this purchase going?
Managed to complete the rear units?
If so are they rented?

Plans to complete the development or considering alternative arrangements?