Hello Everyone,
I am presently researching the posibilities of subdividing other peoples backyards. I am visiting councils and identifilying areas of Sydney that have blocks large enough to subdivide and sell with floor plan. My intentions are to cover all the costs and do all the work in return for % or protion of profit when sold.If anyone has done this sort of thing could you please tell me of your experiences.
ThanksI know a number of people who had the same idea but it din’t get off the ground.
In fact one client is in litigation over this ecat same thing at present. One of the problems was defining what the profit is.
Unfortunaely in the case of my client each party had different expectations.
What experience have you had? What are you bringing to the party?
Why should they nuse you and not go straight to a surveyor and not share the cost?Don’t get me wrong I’m not trying to be negative. It’s great that you are thinking laterally. I’m just adding a bit of practicality having seen a few of these go wrong.
Anyway… good luck with it
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.authe only way it works is if you offer X for their piece of land, you arrange it all and then you sell it for y.
If you say hey we will do it all for you, pay all costs and then I take a cut of profit, you will find everyone thinks their 300m2 is worth 1mill, so you will never make a profit.
Very different approaches. But Could be very viable. PM if you want to discuss further..
Byronent
Adelaide SAHi JD,
As an amazing coincidence, I am in the middle of doing a very similar thing at the moment, though I am buying the land then reselling. Keep in mind you don’t have to buy the whole parcels of land to do this, you can just buy the back yards, and let them keep the front, so it is not too expensive to do it this way.
Another thing to keep in mind, is that you need a decent access to the rear as well. This width of the access will depend on the individual council.
As for not buying, but offering your services, I tend not to agree with Byronent (sorry). In my experience, the average person is too scared/lazy to take something on like this themselves, and if you can convince them you are an expert, they may well take you up. Having said that, I agree a bit with what MichaelYardney said, when he said each party may think thier bit is worth more than it really is.
The most important thing is to know that the first people you ask are going to say no. It is most likely that the first 10 or 20 people are. This is where most people give up. Just because alott of people say no, doesn’t make it a bad idea. Keep persisting, and sooner or later you will get one. As with all good ideas, if it were too easy, there wouldn’t be so much money in it, because everyone else would have ruined it.
Dan.
Be creative… you can buy knowledge.
I have the DVD and presentation on this subject if u r interested …
Hello everyone,
Thanks Michael for your reply. Yes its true I have not had experience in subdivisions. However I beleive that with this method I am starting off with something basic and small and I am very willing to learn. Also I do think that there are alot of people who would be willing to share the profit because they don’t have the time and/or money to do it themselves.
Byronent, in answer to your comment, I was thinking along the lines of having a legal contract signed by both parties so that it is clear and in writing. This would also prevent anyone from not paying me after the land is sold.
Both you and Dan have mentioned buying the back of the block first and then subdividing and selling. How does this work legally??I also read on another post that if there is a mortgage on the land it becomes more complicated as the banks have to be involved etc.
Thankyou all for your imputs, I will be interested in any further comments. JD
Hi JD,
I have to agree with the opinions expressed by Michael in regard to legal problems arising about how profit share should be calculated. I too have seen this become problematic. It can occur when the terms of the contract are being negotiated, or later down the track when you discover that the expectations regarding the meaning of ‘profit’ differ between the parties. What you’ll find is that you can pay huge legal fees to have the profit calculation method determined and later re-examined.I have seen the scenario where ‘profit’ is questioned post-sale, and the original calculation method tested. It’s time consuming, costs a fortune in legal bills (and accountants/auditor too) and is something I think you’d be better off to avoid if you can help it.
Definitely buy the backyard if you can. This also gives you the flexibility to rent out rather than sell once the work is done. In terms of buying the back yard, in my opinion it would be best to buy this as a subdivided lot – i.e. negotiate with the owner to do the subdivision as a condition of the contract and have settlement on registration/issue of the new Title (with you paying all subdivision costs). I’m sure Michael can offer you some more input on this.
I know it can be discouraging when other people don’t support your ideas, but the intention of those on the forum is simply to share their experiences – not to discourage you from getting into investing and making a great success of it.
Good luck with whatever path you choose to follow – i.e. negotitating profit share/ buying backyard outright. You’re already on the right track in terms of doing your research first. So many people forget to start with that!
Leila
Dear Leila,
The whole reason I started this post was to get the feed back of more experienced people so thanks for your comments even though they were not exactly what I wanted to hear[biggrin]Looks like I have lots more research to do.
A setback is a setup for a comeback.Dear Leila,
What if I made the profit a fixed fee rather than a % of the sale price? If I veiw the site, do my maths and work out what my expenses will be.Then put a profit on it and call it my fee. Then have it put into a contract. Do you think that would work? I would have to speak to my lawyer here in Sydney and see how binding such a contract would be.
JDHi JD,
It’s worth a try! Probably better than a calculation.
Good luck,Leila
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