Forums / Property Investing / Value Adding / Subdividing- Avoiding Pitfalls

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  • Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Hi All..

    My plan is to purchase an investment property in a reasonable sized town in WA with an income producing IP on the block and the potential to subdivide at a later date.

    I’ve checked the councils website for future developements and all looks great.

    The properties i’ve looked at are zoned R30 and are blocks of around 820sqm+

    I’ve ruled out the ones with sloping blocks, houses in bad need of repair, pools in the back yard.

    And gone for the blocks that have a easy to rent IP at the front and room to subdivide (and zoned for it), level blocks connected to sewerage..

    The properties are priced around the $160k mark with rents achieveing $160 p/wk..

    my plan is to subdivide and possibly develop 5yrs or more on, unless i see the potential to make a good return selling the back block sooner, then pay the profits off the loan on the front IP.

    What Pitfalls should i look for?

    As i’m looking to make an offer soon..

    I’ve seen 3 i’m interested in..should i offer on all 3 (same agent) and negiotaite the best price?

    What Pitfalls should i be aware of with the subdivision and making my offer?

    Any ideas from those that have been there?

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of calvin_thirty4calvin_thirty4
    Participant
    @calvin_thirty4
    Join Date: 2004
    Post Count: 556

    Hiya Redwing,
    a person you should ask should be KP (on this forum and also in WA). I believe he does similar things or has at least looked into this sort of field. I have discussed a situation like this with him once and he was quite knowledgeable.
    I was looking at an IP in Hedland, block size 1381sqm front road acces and a small alley way out the back available for purchase. Zoning was R20/R25 which means I could have done a ‘Green’ title subdivision to split the block in half then build a douplex out the back and do a ‘strata’ title subdivision.
    I was warned that the subdivision process would take up to 18 months and would cost me an extra $5K. The Douplexes (each unit) would require 440sqm each for it to be passed by the local Shire council.
    Perhaps that is your best place to start! I managed to get the shire rates & Taxes, rules and regs, zoning info and a little bit more just by calling them up and asking. I tested the water to see if I could subdivide (or would the shire stand in my way – they liked this approach as they then after showered me with info rather than me asking for everything).

    I would probably put in for all three! The REA might then help pursuade the vendors to sell. I have found in the past (when I was first trying to get a homeloan) that it is often easier to go for more than one property loan at once than for individual loans because you can include the income of the different homes. This was in my case because I wanted to include a PPOR in the equation. The bank liked my spreadsheets (straight out of Steves book) giving LVRs and income and CoCR (which I had to explain – and made me look more professional). For me it worked, but the O&As fell thru and I didn’t get any of the houses I wanted. Cest-la-vie. Worked out in the end as my PPOR now is much better value for money then the other three would have been! Just to give you an idea of what I did.

    I hope that helps you a little further! You are more experienced at measuring the return potential than I am (I’m sure).[blush2]

    Cheers

    [email protected]

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Thanks Guy’s,

    Things to think about.

    I’ve a ‘wealth’ of information from the councils sites and government sites..now i’ll give them a call..

    KP..are you out there?

    Ausprop?

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    Hi Redwing – just dropped you an email which I hope helps. sorry have been snowed under lately and not on the forum as much as I would like to.



    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of vicgirlvicgirl
    Member
    @vicgirl
    Join Date: 2004
    Post Count: 69

    I’m thinking of doing the same thing in Victoria. I have two or three properties in mind and won’t rule out a joint venture if anyone is interested. Plus I wonder if anyone has the same problem with this site – that is, I log in “successfully” but when I try to edit my account settings the access will be denied. I’m trying to change my subscription details as my email inbox gets blocked.

    Profile photo of prdnationwide1prdnationwide1
    Member
    @prdnationwide1
    Join Date: 2004
    Post Count: 13

    Hi
    Definately offer on all 3 and tell the agent to let each owner know what you have done. This works better if you can offer to settle quickly.
    Check drainage. Sometimes a block looks like it is level but this is not always the case.
    Local plumbers normally know more about drainage than anyone else.
    Happy haggling
    Darren

    Profile photo of redwingredwing
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    @redwing
    Join Date: 2003
    Post Count: 2,733

    Thanks All

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of calvin_thirty4calvin_thirty4
    Participant
    @calvin_thirty4
    Join Date: 2004
    Post Count: 556

    Redwing ow did you go with this one?

    It would be interesting for me to know.

    Just being nosey, I guess.

    Cheers

    [email protected]

    Profile photo of collector jcollector j
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    @collector-j
    Join Date: 2004
    Post Count: 41

    Hi redwing,

    I have to agree with darren, level blocks arent particularly great when the time comes to subdivide.Make sure the block slopes to the street,If it doesnt and your truley buying for this potential WALK AWAY from it.

    goodluck

    Joseph

    Profile photo of AdministratorAdministrator
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    @piadmin
    Join Date: 2013
    Post Count: 3,225
    Originally posted by redwing:

    KP..are you out there?

    Ausprop?

    Hi Redwing

    KP and Ausprop are out there. Why don’t you just look for their latest posting and click on their PM button (if you haven’t already done so)? [cap][biggrin][blush2][cigar]

    Cheers
    Greg F

    Profile photo of kpkp
    Member
    @kp
    Join Date: 2004
    Post Count: 509

    Gday Greg….everybody CONGRATULATE Greg…hes an official property developer.

    Sorry if we haven’t been in contact Redwing…have been very busy with property related matters, but all is now finally settling down.

    Aus has my vote of confidence based on his hands on experience in Perth and surrounds and his number crunching ability, and if I can help please PM or email.

    KP

    Profile photo of wrappackwrappack
    Member
    @wrappack
    Join Date: 2003
    Post Count: 182
    I have to agree with darren, level blocks arent particularly great when the time comes to subdivide.Make sure the block slopes to the street,If it doesnt and your truley buying for this potential WALK AWAY from it.

    Why? I can understand that the land on the down side of the road would have worse views, and thus be worth a bit less, but then again, you would be paying less for it to start with.

    What would be the problem with level land? I would have thought it to be ideal?

    Profile photo of kpkp
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    @kp
    Join Date: 2004
    Post Count: 509

    I would have to agree, Joe can you elaborate ?
    I thought the post said that level block were easy to subdivide…didn’t read it properly…
    Its pretty hard to get one sloping towards the street,and a flat one would be ideal I would have thought.
    KP

    Profile photo of prdnationwide1prdnationwide1
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    @prdnationwide1
    Join Date: 2004
    Post Count: 13

    Hi all
    Level blocks are great. My point is that what appears to be level often isn’t. If you can’t get access to sewer and stormwater pipes then you can’t develop. A builder once told me, in his blunt way, that shi… sorry effluent doesn’t run uphill. If the block does slope away from the road it pays to check the depth of the pipes as often the pipes are deeper than the amount of fall in the block thus allowing you to drain back to the street anyway.
    Good luck
    Darren

    Profile photo of marita15199marita15199
    Member
    @marita15199
    Join Date: 2003
    Post Count: 5

    hi darren
    your are right,shi…… wont run uphill but that wont stop you from developing,you use a step up,in other words a pump. in victoria anyway.
    storm water is another issue, but their are ways around that also.
    cheers
    CHEV

    Profile photo of kpkp
    Member
    @kp
    Join Date: 2004
    Post Count: 509

    Yep,
    Thats right…but the sewer run is not always on the street. Sometimes its at the back of the block…
    Level is not a problem,,,distance to the sewer will allow you to create the “fall” from the house to the sewer junction.Plumbers are really good at doing this :))

    Also the pump is an option. Even in WA . It just COSTS…
    And you can fill a block, as long as you don’t create a problem with levels on the boundry with neighbouring properties…then you need to retain…nothing is impossible,, it just comes down to cost ( I have experienced all these headaches in duplex developments, all in Perth )

    Profile photo of techatecha
    Member
    @techa
    Join Date: 2004
    Post Count: 79

    Love sloping blocks.

    My Company–Retaining Wall Industries(Civil)Pty Ltd—Constructs walls for both commercial and domestic developements.

    Bugga the flat land you all go and buy sloping blocks


    .Give us a call and we will ad $1000s of value.

    tech

    Humans are the DUMBEST of creatures.
    They do the same thing day in day out and expect a DIFFERENT result.

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Hi Guys,
    A small suggestion re buying props to subdivide, you should really check the prop for sewer and stormwater easements. These can present their own problems on where you can build. At the same time, you can find out where the sewer and stormwater “points” are that you need to connect to.
    Cheers,
    Sue [biggrin]

    “Be careful not to step on the flowers when you’re reaching for the stars”

    Profile photo of kpkp
    Member
    @kp
    Join Date: 2004
    Post Count: 509

    Good point Sue,
    The last one we did had a sewer easement at the rear of the block, and sure, there was a restriction on how close we could build to it.
    But apart from that, there were no other problems..

    Profile photo of kpkp
    Member
    @kp
    Join Date: 2004
    Post Count: 509

    Techa,
    I need some retaining walls on a property in Perth…
    Discount for a forumite ?? hehe

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