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Splitter block opportunity

Discussion in 'The Buying & Selling Process' started by montoya, 8th Aug, 2015.

  1. montoya

    montoya Well-Known Member

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    Location:
    Sydney
    Hi All,

    I've flown up to sunny Queensland this weekend to have a look at some property. My idea for this purchase was a buy and hold, but an interesting opportunity has come up that may lead to some equity or be a financial disaster.

    Basically, a combination of deceased estate + non-local agent + first dibs due to a good connection here..

    800+ sqm corner block with house that leaves a lot to be desired for (think we can seal the deal for $360k)

    HOWEVER, I am confident that with a spend of $25-$30k to split the block we could sell the vacant block without the house for $280k...

    Now can someone tell me if im missing something...
    $360k purchase price (85% LVR - LMI exempt) - loan amount $306k
    $12k stamp duty
    $5k loan settlement + conveyancer + sundries
    $30k costs to split block

    $280k sale price for the vacant block
    $10k sales agent fees
    $2k conveyancer fees
    $30k CGT
    3 months holding costs (approximately $400 week x 12 weeks = $4800 @5.2% interest)

    The remaining house on the block would probably be better to bulldoze, but we could be tempted to put in $40k to bring it up to par and just have a great positively geared property..

    Also, would this even be possible to do as I thought that the bank's security is the house, so they wouldn't want to let us knock it down unless the unimproved land value was greater than the loan amount?

    Any help would be greatly appreciated for this n00b who has only dabbled in the easier strategies of positive cash flow, capital growth, and buy/renovate/extract equity
     
  2. RetireRich101

    RetireRich101 Well-Known Member

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    "sunny Queensland" consist a number of councils, each have their own regulations. it would be helpful for us to know which council you're buying the property. based on the price range is unlikely BCC.
    Most neighboring council does not allow allow subdivision of 800m2 corner block
     
  3. beachgurl

    beachgurl Well-Known Member

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    Also factor in council contributions, provision of services to the new block and demolition/removal fees for the existing house.
     
  4. superace

    superace Member

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    Really get your head around the numbers before you go unconditional on your contract. Get a town planner and civil engineer on your side before going unconditional so that you have a pretty solid idea that you can do what you want to do, within budget. Things like nearest sewer connection could be the difference between a $10000 job or not being able to subdivide at all.
     
    Leo2413 likes this.
  5. chindonly

    chindonly Well-Known Member

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    Your $30k cost to split seems too low, unless its already on two titles.
    Councils up here charge around $28k just for the new title. Then you have all of the other costs ontop.
     
  6. RPI

    RPI Property Lawyer, Town Planner Business Member

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    I would allow at least $70k for the split, and 4 months post DA approval to get the plans sealed and titles issued.
     
  7. willair

    willair Well-Known Member Premium Member

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    Maybe listen to what people have said so far,if it's within the BCC control area,then the split costs will be a lot higher then 30k, but looking at the 280k number maybe it's not ,just don't go into this blind because anyone that holds your hand also comes with a high cost..
     
  8. jim1964

    jim1964 Well-Known Member Premium Member

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    Does this connection have his hand in the commission box as well?
    Thats really expensive compared to SA.I allow $25k with sewer extentions.
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I don't see a contingency allocation in your figures which is really important.
     
  10. RPI

    RPI Property Lawyer, Town Planner Business Member

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    $27-$28k in infrastructure contributions as your gift to the council alone.
    Town Planner $2.5k
    Surveyor $3k
    Water & Sewerage $10k
    New Upstream Stormwater Connection $10k
    Operational Works Application $2k
    Compliance Application $1.5k
    Plan Sealing $1.5k
    Registration of Survey Plan $1.5k
    Turf, minor demo, site cleanup and a fence $7k
    If you get a project manager to do it add $10k on top of above
    No contingencies allowed for above either.
     
    jim1964 likes this.
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    @RPI et al. do you have any similar comparison for Sydney excluding S94 contributions?
     
  12. RPI

    RPI Property Lawyer, Town Planner Business Member

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    No NSW planning for me