Hi all,
I wanted to throw a situation at you all and see what suggestions you may have:
I'm in the process of purchasing an IP in a suburb about 30km west of Melbourne that has the council approval/town planning to build a second dwelling in the back.
The home is on a corner and there is access on both sides for both parts of the land.
The final purchase price would be close to $215,000
I'm contemplating if I should build the proposed 2br unit on the spare land, or subdivide it and sell the land off.
If I decide to build, I would need to obtain the following:
Working drawings, soil test, building permit, land subdivision & fencing.
The unit will cost approx $110,000 to build (which includes the drawings, permits and soil test only).
In this case, I would have 2 homes at a price of around $325,000+
Both would be valued at around $380,000 once completed.
If I sell the land, I could get $65,000 meaning the existing home would have only cost approx $150,000 (215,000 - $65,000)
The rental returns would be $185+ p/w on the existing home, and $210+ p/w on the proposed unit. Both would provide good rental returns on the purchase price. on a 100% I.O. loan, the rental would almost cover the full mortgage payments.
Both situations seem good, but I'm worried about hidden costs and extra charges when building the unit. Maybe it's better to let someone else worry about this and sell the land off?
On the other hand, I'm thinking of just building the proposed unit and renovating the existing home during the contruction stages and holding onto them as the gains would be pretty good.
The existing home could be sold for $190,000 (after renos) and the unit could sell for $190,000 (compared to the current market)
And some quick questions:
Can anyone give me any idea how much subdivision usually costs in these situations? And how the long the process usually takes?
Will i be liable to pay the full CGT on the land that I subdivide and sell off?
If so, do you know how they would calculate the land values to base the profits on?
Thanks in advance,
Rick
I wanted to throw a situation at you all and see what suggestions you may have:
I'm in the process of purchasing an IP in a suburb about 30km west of Melbourne that has the council approval/town planning to build a second dwelling in the back.
The home is on a corner and there is access on both sides for both parts of the land.
The final purchase price would be close to $215,000
I'm contemplating if I should build the proposed 2br unit on the spare land, or subdivide it and sell the land off.
If I decide to build, I would need to obtain the following:
Working drawings, soil test, building permit, land subdivision & fencing.
The unit will cost approx $110,000 to build (which includes the drawings, permits and soil test only).
In this case, I would have 2 homes at a price of around $325,000+
Both would be valued at around $380,000 once completed.
If I sell the land, I could get $65,000 meaning the existing home would have only cost approx $150,000 (215,000 - $65,000)
The rental returns would be $185+ p/w on the existing home, and $210+ p/w on the proposed unit. Both would provide good rental returns on the purchase price. on a 100% I.O. loan, the rental would almost cover the full mortgage payments.
Both situations seem good, but I'm worried about hidden costs and extra charges when building the unit. Maybe it's better to let someone else worry about this and sell the land off?
On the other hand, I'm thinking of just building the proposed unit and renovating the existing home during the contruction stages and holding onto them as the gains would be pretty good.
The existing home could be sold for $190,000 (after renos) and the unit could sell for $190,000 (compared to the current market)
And some quick questions:
Can anyone give me any idea how much subdivision usually costs in these situations? And how the long the process usually takes?
Will i be liable to pay the full CGT on the land that I subdivide and sell off?
If so, do you know how they would calculate the land values to base the profits on?
Thanks in advance,
Rick