Forums / Property Investing / Help Needed! / Option on a development block

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  • Profile photo of rob-warob-wa
    Participant
    @rob-wa
    Join Date: 2003
    Post Count: 36

    Hi Guys,

    Looking for some advice , the seller of a development block of land [8 units] wants $1.4m, he has not yet subdivided or developed the land. He has plans drawn up and valuation on the finished units have come in at $375,000 – $400,000 each. 

    I think an option would work on this property. Buying time to market them as House and Land packages. The problem I see is, has not yet been subdivided , so no separate titles to sell. Therefore it could take 12 months to develop.

    What is your feedback, if the offer included the subdividing and developing costs, so while the seller is doing the developing, I was on selling the H&L packages.

    Any information on successful option deals would be appreciated .

    Cheers

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Very hard to do.

    Are you proposing to get sub-division done during your option period? or selling houses off the plan? How are you proposing to finance this?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of beediebeedie
    Participant
    @beedie
    Join Date: 2007
    Post Count: 158

    Does the maths add up to start  with?

    Plans drawn up? Has the vendor actually got development approvals in place or we talking a raw site?

    Valuation? Who's prepared this? Valuer or real estate agent?

    Considering asking price for a 8 units makes it 175k a site add associated costs like  construction , BA costs , council contributions, GST etc with retails being top need from valuation at $400k what's the likely $ outcome for you?

    Nothing wrong with a option for you to pay the development costs but does the development stack up?

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