WA Post a Bargain - Perth 2018

With kids - get them in and settled IMO

 

The kids are still 3-5 years away for us so its just a matter if we want to service a 250k loan in a townhouse while shes out of work or a 500k loan...tough decision.. but I’d rather the land to build on for the future long term PPOR

 

30 Tabard Street, Greenwood, WA 6024

Understand it does not have subdivision potential, however this is bargain land price in a great suburb no?

 

Looks like most of the hard work has been done. I would have thought close to land value.

 

Why would you buy something with no intrinsic upside? I mean, its all just hope and pray otherwise?

 

*no* intrinsic upside?

You may not be able to subdivide it, but that's not the only way to build equity. It definitely has extension/renovation potential and worst case is a large block in a great suburb that could somewhere down the track be used to build dream home? Plenty of intrinsic value Imo for the price.

 

Can anyone explain to me why houses in the city of Belmont/Kewdale/Rivervale (10-20km to Perth CBD) on blocks of 7-900sqm are selling for 300-450k when there are similar houses on less than 440 sqm selling for the same price and blocks of vacant land are selling for 250-300k? Why wouldn’t the vendors subdivide before going to market? Lack of knowledge, financial stress, or Is it just that developers/owners don’t want to go through the hassle of subdivision?
Thanks

 

Great - glad you can see it.

 

Cost of subdivision and selling (incl GST?). You might spend $60k to get $65k back.

Why not just sell?

 

That's my area. Your land values look on the high side and I think a subdivided house would only sell for that price if renovated.

So, there are reno costs and hassle, subdivision costs and hassle, low end values and lots of tax.

It has been done. Google 12 Whiteside Cloverdale and 167 Belgravia Belmont.

12 Whiteside sold for $322,000

and 167 Belgravia sold for $381,500

Not much for fully renovated houses.

 

Yeah so white side bought for 540k on 1000sqm then sold for 322k and lot 1 and 2 (circa 350sqm ea) sold for 260k ea. Total 842k, rough estimate subtract renovation 30k subdivision 100k interest 50k still a 122k profit before tax...

I might be missing multiple thing here as I’m not experienced by my own admission. Thanks

 

GST on sales - total $842k ÷ 11 = $765k
Sales comm on sales - 2% = $749k

Renovation is unlikely to have been $30k on that - more like $45k.... = $705k.

Subdivision = $35k for a simple strata duplex? = $670k.

Interest - no idea - say 5% for a year? $540k + $21k stamps total, so best case prepaid for a year is $30k = $640k.

Stamps on initial purchase = $21k? = $609k.

So at best with a few economies along the way, I call $80k profit before tax (so likely $48k after) which is less than 10% net.

 

I would say that's fairly close. The original owner may not have subdivided to sell because the block was marketed as a duplex potential. They also may not have wanted to renovate. The buyer undertook a (mostly) DIY renovation, so that would have saved some $. The real boost was in getting it through as a triplex, which is what I predicted when I first saw it.


Either way, for the hassle and risk, ot wasn't worth it to the original owner to subdivide and sell.

 

Ok yeah I guess the original owner probably paid well under 540k so not worth the risk...
what risks would you associate with a retain and split?

 

The interwebs is telling me $255k.

Option 1 was to sell for $540k. If this was a ppor then there is no tax. If they split and sell then they at least pay gst and perhaps some other tax.

1. Falling end values
2. Holding costs higher than expected if the project time frame blows out.
3. WAPC refusal
4. Reno cost blow out
5. No market for product created
6. Interest rate increases
etc

In a rising market this is more feasible. In a falling market, I see it ask risky.

 

I did all that off the top of my head so not too bad.

And yes...i see triplex now.

 

It’s not bad value IMO when you are paying $400,000 in surounding suburbs further out for 450sqm blocks. A few knockdowns around already

 

$920,000. A small profit/loss than land and building costs that Myf posted

 

45 Seventh Ave, Bassendean, WA 6054 - Property Details

 

Edit: deleted my post as I forgot it was for the whole block including the area at the front.
That definitely wasn't a money making enterprise for them then.