WA Retain, subdivide and sell (>10km from Perth CBD)

Discussion in 'Where to Buy' started by TB_J, 31st Jan, 2017.

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  1. TB_J

    TB_J Member

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    3rd Sep, 2015
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    Perth
    Hi - seeking some general advice from others who have experience with this (hope this is the right spot).

    I'm looking to purchase my first property - looking specifically for a retain (front) and subdivide and sell (rear block) property within 10km or less of the CBD. At this stage I'm seeking something that has a well cared for but original condition brick home that requires cosmetic reno (would consider weatherboard depending on condition & location).

    Looking to purchase, subdivide and sell the rear block to reduce the mortgage size and create equity in the front property. I hope to complete a cosmetic reno (again depending on condition) during the subdivision process and move into as PPOR.

    I have been looking at the following suburbs - Victoria Park, Rivervale, St James, Bayswater, Bedford, Lathlain, North Perth, Joondana. Would also consider Mosman Park given recent zoning changes (would likely have to go fibro to fit my budget).

    Ideally looking to the keep the purchase under $750k but can investigate going higher if the economics are compelling. I am 27 years old, income is ~$115k, no debts and about $200k in savings. I do have access to guarantor equity, but would prefer to do this on my own if possible.

    Questions

    1. In the suburbs I'm looking at above, does anyone (with experience doing this) think it is possible to create ~15%+ equity in the retained property simply through the subdivide and sell process? (excluding sub division costs).

    2. Can anyone that has been through this process in Perth recently provide a brief overview of the total costs and timeframe for the subdivision process only in your experience? (excluding holding costs, renovations etc)

    3. Any comments around the ideal finance structure to complete this exercise? I'm thinking IO for initial purchase (hopefully can avoid LMI and pay deposit, closing costs and subdivision costs with savings), then once rear block is sold - refinance the mortgage to P&I or IO with 100% offset - hopefully having the flexibility to redraw some of the initial deposit for other ventures (keeping LVR under 80%), of course this depends on how much value is created through the subdivision process.

    I'm sure I'm missing plenty of important bits, feel free to comment - I've got lots to learn.

    Thank you for your time.

    TB
     
  2. Aaron Sice

    Aaron Sice Well-Known Member

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    Look further than the Perth CBD.

    Lots of good deals in the Joondalup area, found one just today that would be a great subdivide, build and sell. Probably a good 90-105k specs dependent after costs.

    Clarkson still has some attractive deals but might be a bit harder to sell.

    Keep your eye on Mosman Park if your budget goes that far. I just watched a lot go under offer and then a planning alert was released for the same lot. I was very surprised at what the lot appears to have sold for and the product they are putting on the lot is average to say the least - but likely to generate them a cool 350k equity by my conservative calcs.

    There was a GREAT industrial subdivide and sell in Wangara just gone too.
     
  3. Perthguy

    Perthguy Well-Known Member

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    Retain and builds in the City of Belmont LGA have dropped to mid 4's. That's fairly cheap compared to what they were in the past. That does not make them good deals though. You would have to research end values of renovated houses and new builds and also factor in construction costs (if you are building) and subdivision costs. It's worth seeing what is around. Just don't assume that because a property is cheap that it will be profitable
     
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  4. TB_J

    TB_J Member

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    Perth
    Thanks for the reply Aaron - Will absolutely be keeping my eye on Mossie Park.
     
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  5. TB_J

    TB_J Member

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    Perth
    Cheers Perthguy, appreciate your thoughts. Scary how much prices have fallen in the City of Belmont - I wouldn't have the balls to take on a spec build there.

    I prefer parts of Bayswater & even Bedford - obviously at a different price point & couldn't afford to build - I would just be looking to sell the rear block and retain the front house as a PPOR for now.

    Do you have any experience with subdivision? I have an estimate of costs and time frame but I'm really looking for others experience to at least set a baseline.
     
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  6. TB_J

    TB_J Member

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    Mods - would it be possible to move this thread to the development sub forum - my questions are really geared towards subdivision than location - sorry!