Hi, really need advice. We are thinking of buying a nearly 1000m2 block with a reasonable 3 bed house, with a plan to subdivide into 3 units.
The owner mentions a price around 600,000, which is far higher than craigieburn average.
There are plans and permits in place for the units.
Buying with a partner( who’s a builder) with whom we share another property without problems. Walking distance from station and hanson road shops.
Please give your advice on the price.Hi there @nicemum
Firstly take a look at high-level costings such as :
Purchase price of land
Stamp duty
Legal costs of acquisition
Cost of getting permits finalised
Costs of demolition permit and demolition itself
Cost of mortgage interest during this time
Cost of the build
Cost of mortgage interest for the build
Cost of subdivision
Selling agent costs
Capital gains taxThen look at likely resale value of the units
If the numbers are close together, don’t bother. You also need a buffer for inevitable cost blow-outs. Best to discuss the idea with your accountant if this is your first attempt. Don’t go buying it without being sure of your numbers.
On the surface of things, unless the existing house doesn’t have to be demolished to make way for the units, this looks like a guaranteed loss-maker.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks a lot, Jacqui.
We have decided not to buy, as similar properties in same street were sold for much less.
Many thanks for advice.
CheersPleasure. The nitti gritti proper “numbers” involve having more experience with development, but it’s easy to rule out a lot of deals just on high level numbers as they don’t come anywhere near stacking up.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Yeah; and it didnt seem right too much above the average price in that suburb.
Luckily i also found similar house in the same street sold for much less
Many thanks for reply :)
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