Just settled on 2nd IP / 1st Splitter block

Well, last week just settled on my 2nd property and first splitter block. Firstly a shout-out to Rolf L for organising the loan. Highly recommended.

Sorry for long read but too many info to convey

Bit of background on the suburb - Coopers Plains. Suburb wise its a great location, bit of industrial around but over the years these will go. Mid-ring Brisbane suburb. Within walking distance its got couple of train stations, buses, hospital, Griffith university x 2, aldi, shopping centre (not as big as Westfield but big enough), ANZ stadium, a new multi-million dollar building/precinct is being built next to hospital to combine the different state/national sciences departments - FSA/CSIRO, DPI, Health, etc . Very close to all major arterials (within 5-10 minutes can be on Ipswich motorway, SE freeway, gateway). Surrounded by very expensive suburbs......

BUT, more importantly was that i've already made my money from the site by buying low - its true what they say "you make your money when you buy" :D. Property was a deceased estate with poor/no marketing – there wasn’t even a For Sale sign out front and had chat with neighbours and even they didn’t know it was for sale. Double block (single title but 2 separate lots already) purchased for around median suburb price. Doing quick reno (might spend about 5-8k) then will rent out. Will get average yield of 4.5-5%.

Plan A) in a few years time sell off house and build 2 brand new properties
Plan B) remove house and sell off each lot individually
Plan C) worst-case scenario is buy-and-hold with view of doubling in 10 years

Could also do a combination of plans – build 2 sell one, sell one lot and build house, etc

I've placed some quick numbers below so everyone can learn from it.

Property type – 3x1x1 on 2x405m2 lots
Purchase price – 407k
Original asking price - 450k
Suburb median – 410k
Loan structure – 90% LVR with LMI + 24k LOC + 33k cash
Reno costs – 5-8k budgeted maybe
Rent – 350-400pw. Cheapest house rental on market at 340pw which is a rundowned property
http://www.realestate.com.au/cgi-bi...ched,House,Terrace,Villa,Warehouse&p=30&o=def

Land value – Double block land (exact same dimensions but without a house) down the road is going for 460k. Another 2 x 405m2 lots going for 239k each but these backs onto a railway line. Another 405m2 lot in next suburb??? is asking circa 300k.
http://www.realestate.com.au/cgi-bin/rsearch?id=coopers+plains&a=qfp&cu=fn-rea&t=lan&q=Go

Could do this straight away and will be in the money from the get go

New build – Won’t put full figures up as won’t be in the black from this scenario until house prices pick up a bit more or build costs go down (I doubt). But as a comparison would build 2 storey contemporary queenslanders. Several have gone up around and sell for 500-600k each – neighbours bought theirs new at 530k. A couple are on market for circa 550k. Turn key property build costs @ ~300k + ~210k per lot + holding costs means will be borderline at current build costs/house selling prices.

Will try and do a breakdown of holding costs if I have time/internet access whilst doing renos.
 
Looks good cashflow,

This is one that you WILL win with.

I am a great fan of splitter blocks. i have done two now. One was in 2 lots just like yours.
ONLY way to go.

Yes you will have frustrations with council, surveying, sewers etc and delays but it will be worth it.
Yea a holding income while council mucks you around...
Best of luck with it.
 
Excellent

Sounds like a great purchase cashflow. I am looking at buying double block very soon with similar intentions however I was thinking Wynumm.

I have only recently arrived back in OZ from NZ, lived over there for past 7 years.

If you hold a property for 10 years then develop / selll do you have to pay any capital gains?

Opinions greatly appreciated
 
Congratulations on your acquisition. There are some great buys starting to appear in the market.

A buy and develop later strategy does make sense as land values in areas with tight supply will always prosper. However, most of the sites we acquire for our clients are developed right away. Couple of things to look our for are access to sewer and ensure the land has a slope to the street.

As far as construction costs go for $300k we are currently building two storey five bedroom house with 2 pack kitchen, stone bench tops, a/c, fans, etc with a turn key finish.

It should be an exciting journey ahead.
 
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