Hi, looking for those who have experience or might have done something similar….
We have a 3.5 acre block we are at the end of subdividing off our main property that we need to sell but it has a quirk, which is an 1800m2 shed on it. It’s attracting the wrong type of buyer for the rural residential area so we’re struggling to sell it. In trying to think outside the box, I have come up with an option that could benefit both a buyer and us, although it’s creative and not mainstream.
The block can be further split into 2 (or even 3) but we don’t have the funds to do so and need cashflow very soon. Is it possible to sell a % of a block as a ‘tenants in common’ deal, with a clearly designated holding, with the understanding that both parties would then pay 50% of costs each to subdivide and create two titles? The new buyer would be able to start a build right away as we wouldn’t need to build on our portion, and we would potentially fence off for privacy. We would split the shed in two so it became a more manageable asset with the middle section being removed and each block retaining a section.
PROS – we get immediate cashflow, the buyer would buy at a wholesale price of circa $900k + pay approx $150k for subdivision, for a block that would be easily worth $1.5m+ on completion (a comparable block just sold for $1.65m). We would have the means to keep the additional block and develop it instead of having to sell the whole thing.
CONS – subdivision costs can can be estimated but not fully known, council process timing, buyer has the risk of investing money into a build prior to separate titles, what if the buyer didn’t leave funds for subdivision costs etc?
Have any landowners that are asset rich but cashflow poor been able to complete a deal like this? Grateful for any insights and experiences shared. Thank you :)
Hi and thanks for your post.
I’ll keep this brief: the more complex the deal, the fewer buyers you’ll attract.
Right now I see you’ve got two paths:
Eat Your Own Cooking
If you’re comfortable with the risk, use your own resources — sell or refinance another asset — to generate the cash you need. It’s usually quicker, cheaper, and gives you full control.
Cash In & Cash Up
Otherwise, sell and move on. Take the best price you can get as is. Sure, you might leave some equity on the table, but you’ll gain certainty and free up capital to use elsewhere.
JV partners or creative structures are theoretically possible, but in practice they add complexity, cost, and risk — usually more trouble than they’re worth unless you have a track record and a database of interested people.
Bottom line: don’t overcomplicate it. Either back yourself with your own money, or simplify and exit.
Bye,
Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks for replying Steve :)
We are actually trying to sell another asset right now to see us to the finish line, had our first open on Saturday which was the worst first open I’ve had in almost 30 years in property :(
If we do manage to sell, the incoming cash would likely be just enough to both hold and complete a secondary subdivision, but after grinding on the initial subdivision for the past two years and at the point of having to eat 2 min noodles for the next few months, I think I need a bit of time to breathe. We are completely tapped out on serviceability even though we have an LVR of around 33% across our properties.`
I’m hearing you on the ‘simplify and exit’ and have started looking back into selling the 1800m2 shed to clear the block and make it more saleable and attract the right type of buyer. We have rejected quite a few buyers due to them wanting to establish a commercial operation within the shed which doesn’t suit the zoning, nor all the neighbours, us included! No point in us solving our short term money problem to create a much bigger life problem.
Thanks again for your input.
Keira :)
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