Hi All
I have found a deceased estate that had $289000 asking price in a good area. It is has not had anything done to it for 50 yrs so in major need of a face lift also stumping (2 stumps)[blink][blink][blink]has to be done. I put in an offer for $270000 which they said would not accept below $280000 for it. House is on a huge block that could either be subdivided giving me 2 blocks or I could put 4 flats onto it at a later date.
Question is should I now offer more $’s even though there is quite a bit of work needed to property initially, knowing the value later on or walk away without getting emotionally involved?
Secondly, I am a complete novice re developing the land. Does anyone know costs involved?
Thank you for your help
Jenny [blink]
Jenny1
how much are the repairs worth?
what is the property truly valued at.
what value would you expect once renovated?
Byronent
Adelaide SAhow much are the repairs worth?
what is the property truly valued at.
what value would you expect once renovated?
Byronent
Adelaide SAHi Byronent
Roughly would need to spend approx $25-30,000
Other houses in same street that have been fully done up are reselling $340,000+ but at this stage only wanted to freshen it up, have not had it valued at it’s true worth as yet.Cheers Jenny[confused2]
Jenny1
Great minds think a like
Byronent
Adelaide SACome on guys I got to get some beauty sleep thought someone would give me direction!
[biggrin]
Jenny1
Property development can have a fair amount of hidden costs, the biggest is holding costs while you negotiate through council approvals this can take upwards of 12 months
Plenty of other people see a fair bit of your money on the way from concept to construction
Architects, engineers, surveyors, building certifiers, council & other utilities require you to pay contributions on release / approval of your final consent
Costs for consent could be as high as 25% + of purchase price if your plans dont stack up at council initially
Having said all that some deals can be attractive particularly if you can hold the property at minimal cost whilst you wade through the council consent minefield
Most developers run some sort of a feasability program on a site which assits them in making up their minds
Local councils should have a set of documentation regarding all of their requirements re developing a block, zoning requirements, street frontage requirements, concil contribution % rates, what you are able to build on a block, types of required construction methods, quota / saturation rates for types of dwellings in certain suburbs etc, etc
Bit of a minefield, a local architect or building consultant/certifier may be able to advise you (at a cost no doubt) what you can do with your block
regards
jonbren
Sorry it is late and I misread your reply.
Anyway, I would be considering if you can split the land and if so leave the current house on one and put a new house on the other. If you can do that, then I would suggest selling subdividing immediately and either selling the house or the land but not both, as that may put you in a capital gains situation.
Depending on the area you are in and coucnil guidelines, you may even put 3 or 4 blocks on. I know where I am, I have seen unit sites for as little as 220m2 although they don’t like to drop under 300m2 as the norm.
As far as costs go to do the above, you need to chat with various people. It depends on quite a few things.
1. What state you are in.
2. Council fees for application and subdivision
3. Who you use to do all this. Surveyor, architech, conveyor, solicitor etc.
4. Obviously the cost of the home and what you choose to put on if you do build on the subdivision
5. Renovations. I would suggest 25-30k to be substantial repairs.It is hard to give you a straight answer based on what you have given us.
I hope that is more helpful. Sweet dreams
Byronent
Adelaide SAThese things take longer, and cost more than you plan.
I swore I would never get into another property that required work – That lasted for about one month!.
Make sure you know what you are getting into. There is nothing illegal about taking a town planner out for coffee, or lunch.
Much of what you want to do hinges on what council will accept. make sure you are in a strong cashflow position before getting into this.Thank you everyone for your replies[biggrin]
I have made an offer on the property (QLD)270,000
thinking this is a fair price considering 25-30,000 needs to be spent to renovate. Owners came back and are asking $280,000 would you up the offer in lieu of money needed to fix? I was then going to rent out the house at the front (rent approx 250.00 pw) and down the track depending on cost either subdivide or build…what would forum do?Many thanks
Jenny1
Stand firm on offer and maybe make it unconditional.
Finding out what the motivation is to sell would also help get you an indication on what you can get away with.
For example when I sell, I give a price to agent, advise not negotiable and the only offer I want to see is an unconditional offer with my number on it. The agent knows I am in no rush to sell and therefor can wait. If it takes too long I actually up my asking price. Works ok for me.
Now renting as you suggested would tell me the house is livable and you will be instantly in a negative cash flow position. If you can sustain this while you subdivide etc then that is fine. If you can’t you may find yourself in a motivated position to sell quick if things go wrong and hence your price may be impacted.
One last thing I do and not sure if that is legal over there but I get other people to make offers also, lots of conditions and way under my price. Yes I know it is unethical but it has worked and does cause a panic if the agent is presenting all offers.
Goodluck.
Byronent
Adelaide SA
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