Hi - Mother in law (MIL) is 75 yrs old, she lives in a battle axe property approx 1500 m2 in Blacktown. The property currently has two (2) houses on it ( MIL in 1 and family member in another 3 bdr house. Both are on the one title that is not subdivided. Father in law passed away recently and MIL concerned about financial viability of her keeping the property due to as she describes "poor choices over the years including a reverse mortgage". Our first and foremost concern is assisting her and giving her option to stay in her home until she chooses she wants/needs to leave and also financial stability and ability to enjoy the rest of her life. We have made very basic enquiries with Blacktown Council. We own multiple investment properties ourselves but have no knowledge of what is best in this situation. Property is zoned R2 Battle axe block next door, we are aware would need to be shared driveway due to MILs being only 3.5 m wide and Council advising needs to be 5 m. Don't forsee this as being an issue with neighbour as now understand why neighbour who apparently wants to subdivide himself has been chasing FIL over the years to pay him for shared driveway. I understand there is LOTS of things to consider, I have had a quick read over the Local Environmental Plan and Development Control Plan and it is so foreign to me. Realistically while i want to help my MIL i don't want it to be at the financial detriment of my family and MIL agrees with that. I am reasonably confident that Blacktown will continue to grow and the property is located close to M4 and all that Blacktown has to offer. Very early thoughts are to make enquiries re : Obtain Council Approval for future subdivision for development for such as town houses etc ( would need to be sold to a developer opposed to me doing it) Purchase the property from MIL now for market value with her understanding (and legal agreement) both properties would be rented at market value ( MIL has expressed before that is understandable and she would have the money from the sale to pay this). Where it gets messy is the family member who currently lives in the 2nd property ( MIL & FIL had received legal advise previously that due to circumstances and arrangements when built family member has no entitlements) but would now be required to pay market rent for the house which no doubt will cause a great risk to the relationship and may well result in them moving out and a non family tenant would then need to move in (MIL) in agreeance if this was to occur. Thoughts on the situation, circumstances would be greatly appreciated. Q. If we go down the path of subdividing the property - what is involved and what $$ are we looking at ? Hear Council application fees are very high ? Q Would we be better financially going for 3 townhouses on that block ( 500m x 3 ) or maybe a duplex ? MIL house in average condition. Q. Is a town planner the right person to start the process with ? Obviously a solicitor also ? We are looking at getting 3 local real estate agents to give us an appraisal. Kind Regards. Any advise is greatly appreciated.
Thank you for that, had thought ( but as early stages not enquired yet) that it will effect her aged pension i assume due to money from sale in her account. Stupid question but what tax issues? (if its something for you to mention as i imagine it would probably be complex) But in saying that if it gets to the point that she can no longer fund the reverse mortage payments and she has to sell it, it will be the same scenario irrespective who buys it i would think ? But i suppose it depends if she sells not to family and therefore can't live there anymore she will wants/needs to purchase something else she won't have money in account so not sure how that affects things. We will have to get legal advice, centrelink etc. Thankyou so much
it’s also important to consider the family relationships at play too. You might like to also consider the possibility of your MIL simply selling the property as is and moving somewhere else more suitable as she ages in order to free up finances and have a fresh start.
Hi, Thank you... Yes we know it may cause family issues but my wife feels her mum is the priority and that is her main concern. That's also the issue MIL has expressed she does not want to move from her house, shes been there approx 48 yrs and any discussions about down sizing or selling and moving elsewhere she is not interested so it breaks my wives heart that in reality she may have to sell due to finances hence us trying to think of options
Why are you considering getting plans to build townhouses and selling to a developer then? That is not freeing up cash for her to remain in the home. Selling to you, then your MIL renting back to you at market rate is also more likely to benefit you than your MIL (renting vs owning at age 75 - really?) If allowing her to remain there is the key priority, then she is better to subdivide the back house off (with your assistance), then selling it with vacant possession to pay out the reverse mortgage. While this option would likely frustrate the family member that currently resides in the other house, it doesn’t result in you getting unnecessarily involved in purchasing her biggest asset.
Thank you, i do appreciate your reply. - we can discuss with her and consider selling off the back property but as at starting point would have to consider access to both properties situations. Also again from what she has expressed i don't believe she would want to do that, at worse if family member moved out and she could then receive rent at least she could also have some control over tenants. She would rather do nothing and stay how it is but the reality is she will run out of money to pay the reverse mortage. - the town houses/ developing was just to have this in our minds if it was an option to then know if we purchased it and at some point she wants/needs to move out it can be sold and if by developing etc was to make a profit we would be happy to also use that to contribute to her next plans/ arrangements. Our concern is the property unfortunately due to neglect is not in the best condition and we have to be realistic for the sake of my own family if we went down this option of purchasing it that i will not lose in the long term which obviously would have an impact financially for my family, which again what my MIL has expressed she doesn't want, hence why we are trying to look at any options to keep her in her house. - I fully understand what your are saying about the rent and we wish more than you could know we were in different circumstances to be able to help her but we aren't and we can't afford the shortfall in loan repayments if we were to do no or reduced rent. Calculating for example the money she would have in the bank after sale ( yes we need to make enquiries about tax implications and obviously centrelink) and approx market rent it may cover her say for approx 15 years or so and yes i know she will not have an asset, but we could in theory sell it then and purchase something more appropriate for her to then live in then, but with her current circumstances she can probably only afford the repayments for approximately 2.5 yrs so we are looking at any options when can to see what we can do for her to stay in her house as she wishes. My wife is devastated by the recent unexpected death of her father and is helping her mother get things in order eg budget, bill payments etc as her father had previously done all of this and now the financial situation has become apparent. She doesn't have support ( financially or assistance in general of other family members ) so shes trying to do what she can for her mother who she loves dearly and is very protective of. Thank you.
I don't understand why suddenly trying to be a property developer is somehow a solution to the MIL's situation? Or even a good idea generally. Might as well help her start her own IT company - you both probably have the same amount of experience in that area as property developing, and there's probably even less risks of stuffing up her personal finances doing that.
I understand it’s a difficult situation but it could be seen that you not simply trying to help your MIL, but also trying to benefit financially from her assets. While some options are not her ‘preferred’, she may need to make some tough decisions for her own interests. I would advise her to get some independent financial advice. It may be that simply removing the relative from the other home and getting market rate is enough to enable her to remain in her house longer.
Because the vast majority of people who fantasize about it have never gone through one to really understand what kinds of risk they will be subjecting themselves to. Tbh every time I start a new development I do it with trepidation and plan to de-risk as much as I possibly can. I obsess over the risks. It's probably why I'm still standing today. Personally I think getting into a development without a decent amount of knowledge, excess cash/funds available and experienced contacts to help you is just crazy. It's demonstrative that you have no idea about risk management.
Great summary of the mindset of a developer. I cant tell you how many sites I get close to and then decide the risk is too great. Summary of my risks are as follows: Accounting and legal Acquisition and purchasing terms Planning Design Construction Finance Sales and settlement Each risk above I try to minimise by getting great advice, working with great consultants who I pay accordingly (if the advice is free, how good is it going to be, should you rely on it for a multi million dollar project?), or passing onto current landowner (with favourable acquisition terms) or the end purchasers with presales. For the type of development which im looking into, which is land subdivisions, its hard to find a workable site that has no risk or even an acceptable amount of risk, there is always something. The joint venture with the landowner is the closest to a derisked site in my opinion, but they are really hard to find, i would know, i have spent almost a year trying to find one. Its funny that the more you learn about development, the riskier it feels. My boss at work has a saying which he picked up from someone else sometime ago, which is 'only dumb people are developers, as smart people wouldn't take the risk.....'
