Subdivide existing block (2 units)

Hey All,

I bought a block in Ballarat, Victoria with a couple of 2 bedroom units on it a few years ago. They currently are on a single title. I am wondering if others have experience and would recommend/discourage either of the below options:

1) Subdivide property and sell units separately; or
2) Sell property as a single block with both units.

At this stage I have no intention of selling, but would like to be aware of what would be the best option when that time comes.

 

Almost certainly 1 if you're trying to achieve the most profit.

 

Thats what I would have thought.

Is it an expensive/complicated exercise to subdivide?

 

Rule of thumb cost for a "straight forward" subdivision around $35 - $45k - plenty of hidden headworks charges etc etc. Could be less. Depend on the configuration, services connections etc.

 

When I was looking at subdividing my land, people have quoted me up around the 15k mark + what ever regulations come up. I would budget approx 45-50k when its all said and done...anything left is a bonus. This was the vibe I got anyway.

Mine was for subdividing a block and selling with a planning permit to build.

 

I own a dual occ in Adelaide, Council requested that the properties be made compliant a few years back. Luckily the partition wall was already brick, I just needed to build a firewall through the roof space which was under $5k. I investigated continuing with the subdivision process, but given I had no intention of selling the properties, it would have added to be holding costs to pay 2 x council rates etc. If I was ever to sell then I would definitely subdivide and sell separately.

 

As others have said, i wouldnt be subdividing unless its for a purpose, ie, selling one or both.

The subdivision will likely require the following, although without seeing the site, it could be slightly different:

- update dwelling to meet building regulations - fire rated common walls - discuss with building surveyor
- each of the service authorities in your area will be referred your subdivision plan for comment and approval:
- electrical authority - powercor may want a new pit installed and new supply to each unit, or may want a licensed elecrician to inspect and certify the existing wiring, especially if lot 1's supply enters lot 2, and vice versa. New pit would be 3-5k (although sometimes it can be free), or electrician to do inspection is 0.5 - 1k.
- water/sewer authority - if the properties share the existing sewer connection, central highlands water may want a limited owners corp established to manage the common effluent drain. You will probably just be required to pay a non works fee of about 1k.
- tele/fibre - existing dwellings that are already connected to telstra or nbn are exempt from the standard sub requirements
- council fees 0.5k
- surveying costs factor in 5k (site dependent)
- conveyancing/titles office costs 2k

You will find a subdivision of 2 existing units can be fairly cheap (about 10-15k), however, issues will services and fire rating can add to the fees.

If you do decide to do it, speak to a licensed surveyor who will manage it for you.

 

In Vic it's the same thing. Subdivision... land, units, car parking spaces, whatever. Breaking up something into smaller bits = subdivision

 

I am subdividing and building a unit at the back and was informed of the following process .correct me if I am wrong
Process:
1. Engage surveyor/planner/engineer, prelim assessment of site and expected costs
2. Do survey of property to get title re-establishment and feature and level info
3. Design sub boundaries, apply for permit
4. Design services connections
5. Perform works
6. Get compliance from all authorities
7. Conveyancer lodges at titles office, get new titles
Total cost including planning permit approx $25,000 to $30,000 plus another $12,000 for service connections for the new unit

 

Steps #5 seems to be the most expensive?
what is the scope of work for that.

 

I hate to

Hate to be the bearer of bad news. How many guys have actually done these and made money?
Subdivisions are hotly contested, easy ones get snapped up or people over pay for them.
Rule of thumb... minimum 5-6 new lots to make any real profit ie 15-20%

With Strata titling units it is very difficult to make money... firewall costs, many of the old blocks of units are rental cash cows , they don’t appeal to owner occupiers and very hard to sell them separately (not at premium prices anyway as the investor will want the same 5-6% gross yield).

Once You factor council fees, increased rates, vacancy and opportunity cost, fireball, need to refresh and Reno ... no real profit

Development is a game of scale...
only the guys at the apex of the triangle can afford to buy large sites, often from people in distress and execute presales / raise the finance. The small 2 or 3 lot deals don’t make much sense these days, gst and council charges get worse each year

 

I've bought a duplex pair on one title which I split on paper. I made money.

It cost me stuff all to do, and didn't need to upgrade anything in the existing buildings - I think it was around $12k or so all up.

I agree its hard to find these sorts of deals, but part of my personal strategy is to scour through literally tens of thousands of listings to find opportunities like these.

 

Saw a video recently talking about duplexes that will be relevant here.