SA Thoughts on this Black Forest property

Discussion in 'Property Analysis' started by A Ka, 11th May, 2021.

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  1. A Ka

    A Ka Active Member

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    Last edited by a moderator: 11th May, 2021
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    What are the costs to subdivide and get council approval ?
    Then how much GST and income tax is payable?
    A lender may also apply all the sale proceeds to some or all debt reduction.

    Could this even break even for the % of cost attributable to the % area of land + those costs, selling costs etc ?
     
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  3. D.T.

    D.T. Specialist Property Manager Business Member

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    About $20-25K in SA to subdivide (including approval, surveyor, water, state fee etc)
     
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  4. Dave Radelaide

    Dave Radelaide Well-Known Member

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    I'm far from an expert and don't really know the Black forest market well but, based on what else is available presently, two 175m2 two storey duplex finished to basic spec could probably get around 700k each?
    Cost to build = at least 250k (with very lean, cheap efficient build)
    Cost to subdivide, sell each etc = 25k
    Need at least 20% margin to make it worthwhile...
    So wouldnt want to be paying 375k for land (750/2).
    IE. Think you'd need to be able to put three townhouses on it or two larger, higher spec property that could fetch over million. The location is okay, don't get me wrong, but not sure there is the market for that yet. May be a buy and hold though - things may stack up differently for redevelopment there in 10 years?
     
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  5. Baker

    Baker Well-Known Member

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    Be aware that while there is a water main (blue), there is no waste water (yellow) running past the back of the property. Gaining access to that will cost extra.


    upload_2021-5-11_23-39-31.png
     
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  6. Charlie44

    Charlie44 Member

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    The only way this could be a deal is if you were to keep the existing property and build at the back. Building 2 new properties to sell straight away would (according to my calculations) land you at a loss. With that said by the time this project would complete, there is a very real chance you could sell for more than the 700k quoted above. No guarantees on that however....
     
  7. A Ka

    A Ka Active Member

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    Thank you, all
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    It runs past the front of the property - so if it is subdivided, you will need to create an easement to get to the services at the front of the existing house (if you can achieve the required falls).
     
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  9. D.T.

    D.T. Specialist Property Manager Business Member

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    Good pickup
     
  10. Charlie44

    Charlie44 Member

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    Wouldnt you just go left and connect to the nearest point? It's closer and saves you from having to create an easement.
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    May not be the cheapest option - extending the board's sewer/road excavation vs domestic drainage line and tapping into existing connection (private sewer line).
     
  12. A Ka

    A Ka Active Member

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    thank you so much for your valuable input. Which government body would be best placed to confirm those concerns?
     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    Either a civil contractor or a commercial plumber & drainage contractor should be able to throw some rough numbers at you for a comparison.
     
  14. A Ka

    A Ka Active Member

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    Thank you so much.
     
  15. A Ka

    A Ka Active Member

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    I contacted a civil contractor and they just said to get it all up and running would be the same process and would be covered by the $25k subdivision budget
     
  16. Baker

    Baker Well-Known Member

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    Yeah maybe, but be ready for extra costs just in case there's a hitch.

    For example I did a simple 1-2 subdivision last year in Edwardstown and when the time came for the new sewer access for the 2nd block, it turned out the line in the street was deeper than 'standard'. The wastewater connection cost went from ~$2k to $8.5k, and that was just for SA Water to dig a bit deeper with the line going straight past the front.
     
  17. A Ka

    A Ka Active Member

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    Thank you. I chickened out.

    it sold for $965k.
     
  18. Baker

    Baker Well-Known Member

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    Staggering! Not worth it.
     
  19. A Ka

    A Ka Active Member

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    Thank you. I wasn’t confident enough that 366sqm corner block will fetch $545+ in 12 months
     
  20. magloop

    magloop Member

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    similar property i found with no mains or sewer down the cul de sac, might be a dud due to costs of running mains and sewer easement? any thoughts?
     

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