Heres the deal. I bought a 7602m2 block 14 months ago for $50,000. It is only an hour from Perth, Zoned R20(av 500m2), 10 mins from the beach, close to majoy industry 4 work and is positioned at the end of the new freeway to Perth.
I have had the block surveyed, and intend on subdividing into 3 green title lots of at least 2201m2 each. Zoning allows for up to 12 blocks, but sewer isnt due to be connected till 2010-2012, therefore at this stage, blocks must be greater than 2000m2.I want to use equity in block(now valued at $200,000+), to borrow to complete subdivision. Estimated cost of subdivision is $70,000.
When completed, each block would be at least a potential 4 house site(when sewer goes through), and would be worth more than $100,000ea.
Im also toying with the idea of relocating an existing dwelling on to the smallest block, with the intention of selling to recover costs.
A house in this area on a 2200m2, potential 4 house site, block…would be worth at least $220,000. (only one on market now 1012m2 for $226,000)
Id love to get your thoughts on the Development Finance, and also on the relocation idea?
Any comments will be greatly appreciated as Im new at this game!Cheers
Hi there
You don’t mention the size of the current loan secured against the property but on the basis that you borrowed to purchase the property initially and that serviceability is satifactory i cannot see any problems in funding the development or indeed funding the relocation in due course.
Given the price you paid for the property you maybe better off to construct a dwelling on each property once the subdivision has been completed and capitalise on the rising WA market.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
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Thanks Richard for your advice.
I own the block outright. [strum]Funding should be a formality then.
With the right lender you should be paying nearly home loan rates.
Happy to help further if you need assistance.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
100% Finance on selected properties in the USA.
Email us to be added to our mailing list.
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
hi
I would organise a lender to do a stage development loan they will take the land as security
you do the sub division and then either sell offthe sites as you wish or start building and selling off as you go.
if you throw the land in and its not got any loan on it
the brokers in perth would’t have any problem securing that loan.
if I were you I would land bank until you got the drainage
in the perth market for me is not going west in any hurry and is going up
so if by gettng the drainage in your are going to get more on and you are not going to make more at this stage I would land bank.
My.002here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]
currently looking for up front money at 15% p/a pm me if you wishYou should be able to borrow at least 40 – 50% of the current value of the land, either verifying your income or on a low doc basis. I would do it on a Line of Credit basis ideally that will allow capitalisation of interest until you reach your borrowing limit.
Providing your $200k value is correct you will have enough funds to complete the subdivision into 3 lots and pay the interest. I would then sell one of the subdivided blocks to payoff your borrowings then hold the other two until further development or sale opportunities arise.pilihp – You would be able to borrow a lot more than 40-50% of the land value.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
100% Finance on selected properties in the USA.
Email us to be added to our mailing list.
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
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