Profitable venture - selling subdivided vacant lots in WA?

hey everyone,

I'm thinking of trying a new short term strategy of selling subdivided vacant lots in WA to increase my capitol and ultimately servicing. However I may be barking up the wrong tree and this "strategy" may simply not be feasible. Is anyone else doing this right now and if so is there any money in it? How much ROI % are you seeing?

I can only purchase $500K or below, anything above that is out of my price range due to servicing. I understand this alone may stop this strategy from working.

ta

 

will you be buying these within a company?

As you will have GST considerations.

 

Basic feaso figures for splitter blocks Perth

WA: Development, title split, granny flat, and other general questions

 

The strategy is fine, and I pretty much aim to do it wherever I can myself.

Hard part is finding viable sites to do it on. Have you tried looking? I sift through thousands of listings and don't find hardly any.

 

Yeah been looking, not for long, maybe not long enough.

So if your looking through thousands of properties how often do you come across viables?

how many have you done so far?

 

I'll shortlist maybe a couple a week. Find something worth investigating further maybe every month or two. Find something I'd actually be willing to pull the trigger on maybe every 4 to 6 months.

Last one I actually did I found Nov 2018 and settled on all the sales in March this year, after around a year's work on the retain/renovate/sell vacant block backyard.

 

I was hoping to do at least 2-3 of these per year once my servicing was better.

 

Well me too, but in practice I've preferred to be more selective and do a really profitable one once a year or 18 months.

 

subdivisions are time consuming processes, if you were wanting to do multiple a year you would need to be doing them simultaneously.

 

If you can only afford 500k you can't afford to develop. A single lot split to two won't usually produce a profit esp after gst

 

That was the plan to have several on the go in parallel if servicing allowed.

 

What in your opinion is the entry level in order to make a decent profit? And what do you think is a decent profit in either % or $ ?

$500 is only the first one, after that any profits would allow us to increase our servicing to get into the $700 range, then of course if we keep going.....however if we can’t of course make any profits at $500 then it’s of course it makes it really hard to get the ball rolling.

Maybe I should look at a JV? Since I do have over $350k cash.

 

Everyone is different, but I think most people look at about 30% gross profit, which allows for a lot of redundancy should things go wrong.

@thatbum what are your criteria for the really profitable ones you undertake?

 

Hold for 12 months to avoid full CGT.

 

I believe that is only for a house, not newly created lots.
Seek accountant advice.

 

Yeah similar actually, looking for above 30% gross and 20% after tax. Willing to go a little bit lower for something really quick/easy/risk-minimal.

 

Dont take internet tax advice would be my suggestion. In this situation this statement is incorrect

 

Have you pursued low doc option

 

I will persue Low Doc loan.

If I do so and end up with a possible $1m is this still enough to buy and sell vacant land for a decent profit in WA?

 

Dependent on area but it will give you more choices