hello all, i am looking into potential IP that i can rent out and later subdivide. so far i look at north-east adelaide, ingle farm etc. but the numbers don't really make sense: old'ish houses on 650-700 sqm blocks go for ~ 300k. if u subdivide and build 2 townhouses or two standalone standard standard 3-2-1 ~ 300 sqm blocks with 150 sqm dwelling going for 340-350k. (construction cost~ 180k). so your expense here is at least 300k (original purchase) + 360K (to build) + 30K (application/processing)=690k thats at best. so u loosing money at the end.
You are right. Subdivision does not always make profit. Basically, if the market goes up. With the subdivision, you can make double profit. So, buy and hold until market go up, then do subdivision before selling.
Depending on your goals and timeframes some people will buy sites and develop them at a later date when the numbers stack up, but the majority I know won't buy a site unless it stacks up profit wise right now. If your looking to buy an IP to rent and hold that also has development potential later on then that too can be good as long as it fits into your strategy getting you closer to your goals. I would work it out on the worst case scenario that you may never be able to develop it and it will just be an IP. Assess it on that basis and if it still makes the cut then go ahead, with the development potential being a bonus. But really all comes down to your plans, strategy and goals.
Thanks guys, the current goal is to be able to initiate the process within 1 year of purchase, to complete the deal within 2-3 years. Since I havent done this type of project before i didnt want to jump into multiple dweelings or line of townhouses. start small with 2 any ideas of areas where this may seem possible?
