Owner (O) has block of land of 7000 sq. m in a regional town of population 16,000.
Asking price of land is $295K.
According to agent, O is not in a hurry to sell, and would allow me - time to investigate development costs before sale.
At this point I'm thinking : option!
And then, Vendor Finance!.
O has expired council permit to subdivide block into 10 lots.
Regaining permission appears to be a formality.
I offered Owner $500 for an 18 month option at $295K + 5% of profit on development (around $8K in total).
Still waiting to hear back.
The value of the land is difficult to gauge. I first thought it was a good deal, but recently I discovered that Hickinbotham is offering a house and land package on 500 sq m for $221K. It's 4 bed, 2 bath and 2 lockup, 204sq m.
So to compete with that and still make a profit I'd want to be able to offer a better design for the same price.
I haven't checked out the cost of building a 204 sq m house, but it's got to be at least $150K.
So that makes their land worth $50K max.
On the block I'm looking at, my rough estimate of subdivision costs is $185K.
I want to build 10 New Age homes for a market where the competition is selling at $221K
So, land cost would be $295K + $185K = $480K = $48K per lot.
House construction cost, at $1100 per sq. m, would be 204 X $1100 = $224,400, say $225K.
Total cost of house and land package is therefore $225K + $48K = $261K.
So my cost is $40K above Hickinbotham's selling price!
Either they got their land really cheap, or the Owner of the block I'm looking at wants too much, or building is cheaper than I thought.
Anyway, the reason it's been on the market for 2 years is probably because Owner is asking too much.
There's a lot to do in the subdivision. Council wants a road with kerbs and guttering, etc, etc.
O well, even if it doesn't go through, at least I made an offer. If Agent says Owner can live with the terms there's still time to explore further before I'm committed to anything. And even then, the commitment would only be $500 + my time.
But I'll certainly contact Hickinbotham and ask if they can build New Age houses for me when I find some appropriately priced land.
Asking price of land is $295K.
According to agent, O is not in a hurry to sell, and would allow me - time to investigate development costs before sale.
At this point I'm thinking : option!
And then, Vendor Finance!.
O has expired council permit to subdivide block into 10 lots.
Regaining permission appears to be a formality.
I offered Owner $500 for an 18 month option at $295K + 5% of profit on development (around $8K in total).
Still waiting to hear back.
The value of the land is difficult to gauge. I first thought it was a good deal, but recently I discovered that Hickinbotham is offering a house and land package on 500 sq m for $221K. It's 4 bed, 2 bath and 2 lockup, 204sq m.
So to compete with that and still make a profit I'd want to be able to offer a better design for the same price.
I haven't checked out the cost of building a 204 sq m house, but it's got to be at least $150K.
So that makes their land worth $50K max.
On the block I'm looking at, my rough estimate of subdivision costs is $185K.
I want to build 10 New Age homes for a market where the competition is selling at $221K
So, land cost would be $295K + $185K = $480K = $48K per lot.
House construction cost, at $1100 per sq. m, would be 204 X $1100 = $224,400, say $225K.
Total cost of house and land package is therefore $225K + $48K = $261K.
So my cost is $40K above Hickinbotham's selling price!
Either they got their land really cheap, or the Owner of the block I'm looking at wants too much, or building is cheaper than I thought.
Anyway, the reason it's been on the market for 2 years is probably because Owner is asking too much.
There's a lot to do in the subdivision. Council wants a road with kerbs and guttering, etc, etc.
O well, even if it doesn't go through, at least I made an offer. If Agent says Owner can live with the terms there's still time to explore further before I'm committed to anything. And even then, the commitment would only be $500 + my time.
But I'll certainly contact Hickinbotham and ask if they can build New Age houses for me when I find some appropriately priced land.
