House with subdivision potential

[New_Investor]

Hi SS Gurus,
I want to ask your opinion about a house I am currently looking at. The house is in Ipswich on a 1500 square meters block, current house is in the back of the block. It is low density zone which allows 10-15 lots / hectare. Spoke to the council it can go down to 450m / lot, and this block can be 3 lots including the current house.
The house is renting for 290/week and in a fair condition. and asking price was 350K, and it has been on the market for long time, gave them another call today and price down to 290K.
500M from the house, the zone is medium density which allows 50 lots / hectare. Those blocks are splitted into 7-8 Villas / townhouses.
Is this considered as a good buy?, I am looking to buy and hold for 3-5 years, subdivide / build, or subdivide and sell vacant land. What?s your throughts. I am not sure how to calculate the return on this type of investment?.

I hope you can help me with your ideas.

Thanks
Ram

 

[serendip]

Figure out how much it will cost to subdivide, including council fees, surveyor, connections, holding costs. Figure out how much land goes for in the area. Work out if there's profit.

Then look at subdiving & building, see if it's better or worse.

Then look at how many you could put on the site at the density allowed, development costs, see if it's better or worse.

Throw risk into the mix, also think about what the supply is like and likely to be for the time frames you're talking about.

If it's develop-able figure out why they've had to drop the price.

Once you've done all of that, the answer should be obvious

There are spreadsheets around on the site if you do a search which will help you figure out all the costs you need to consider.

Signed
The absolutely-non-guru (but that's where I'd start)

 

[Sailesh Channan]

You will need to check that the block in question is not mine effected before you buy.

Then you need to do your research on what is the suitable development for the street.