Finance Query - Maximising Equity for a PPOR with development potential

Hi,

I am looking to buy an investment property and need some advise to understand if/how I can maximize the available equity from my PPOR.

The land allows me to build 2 houses on separate titles. Would a bank valuation factor this in to increase my equity? For now I want to live in my PPOR and don't want to actually subdivide and build on the land.

In my opinion, if a valuer was to compare recent sales figures nearby it wouldn't be an accurate valuation as the additional land provides much more development potential than most houses in the area.

If I got a DA or CDC approval to subdivide and build 2 separate houses but didn't actually build for several years (or ever), would this translate into a higher valuation from the bank?

I understand that market value does not equal bank value, but just want to explore what options are available.

Purchase Details
⦁ Purchase Date: Late 2019
⦁ Purchase price: $1,000,000
⦁ Loan: $800,000 (80% LVR)
⦁ 3 bed + 1 bath house on 900+m2 land
⦁ Purchased off market and below market value when factoring development potential
⦁ Location: Sydney (Blacktown Council)

Land potential
⦁ Development block with wide frontage, high side, large lot size
⦁ Subdivision viability verbally confirmed by Blacktown Council. Meets minimum lot size requirements of 450m2 and frontage of 12m per lot.
⦁ Can subdivide existing land into 2 separate torrens title lots approximately 450sqm each (both street facing). Estimated land value 600-650k per lot, as verified by recent projects in the suburb.

 

It might be possible to organise a full valuation where the valuer takes into consideration how the property can be subdivided.

The real question though, is what are other similar properties in the area actually selling for? If other properties that can be subdivided have recently been sold, that will heavily influence the valuer of your property.

The other option is to actually subdivide the property, then get valuations done on each block.

 

Cash out on vacant land is a challenge for many lenders, to add to Peter's feedback.

 

In a perfect world yes, in reality it's unlikely unless you are looking to fund the development, then they would take an as-if-complete valuation.
Best to speak to a broker about your options

 

Out of curiousity what suburb is it?
Trying to think of a Blacktown council suburb where a vacant block (subduable into 2 lots) goes for 1 mil and then potentially sell 6-650 each.

Sounds like you already have 80% loan. Dont think your going to get extra equity based on the figures you have. Maybe when you complete the subdivision and have two titles? Lot of work involved in subdivision and based on figures it may be profitable but its not a massive (50% etc) so cant see how bank would value the one title much more (unless market shifts)