Looking for subdivision potential property in SA

[Schmiechen]

Please help.... I am looking to purchase a second IP.

My partner and I have an IP in Darwin, which is doing quite well, neutrally geared.

We are now looking to purchase in Adel, as this is where I am currently living.

We have borrowing capacity of around 500k. I am looking for a larger block that has an existing house on it. I would like to subdivide the block and build a house at the back. I would like to find a house that needs a quick cosmetic reno, so as to get that rented out straight away, hopefuly.

I have been studying Dymphna Boholts Ultimate realestate course, so have learnt alot about property developing etc, and are now ready to get into this game as a full time business. Last week I was made redundant, I was working at Olympic Dam, Roxby Downs. I feel that this is the right time to get involved in property developing, but i just dont know where in Adel, and I am hoping that someone out there could help me.

I have two options, the first one is to spend the whole or near to the whole 500k, and buy closer to the city. Or spend half that and buy in the Southern or Norther suburbs of Adel.

Would really appreciate any suggestions, Thanks in advance.

 

[jim1964]

So tell me.............Whats Dymphna suggesting you do ??

 

[Schmiechen]

Dymphnas course has given me all of the information on every possible option to help create a passive income, and to hopefuly one day replace my income.

It is up to me to decide which option I choose. I have chosen the option to find a large block, subdivde, renovate the existing house, and build a second house. I have chosen this strategy as I would like to be able to create a passive income off of this project, and build up enough equity to allow me to go on and do the next project. Im fairly certain that this is what I want to do, so I am now trying to figure out, where in Adel this would be best done, with the 500k, that I am able to borrow.

Can you suggest anywhere?

I have spent the weekend going to about 12 open house inspections, in the Morphett Vale, Christies Beach/Downs, Aldinga Beach areas, and found plenty of blocks that had subdivision potential, but I couldnt see anyone else doing it. I would really like to be able to see what other people have done, so as to get an idea for myself. I have never done anything like this before so as you could imagine I am a little scared, and really want to make this work.

 

[jim1964]

Can you suggest anywhere?

Sorry,i have not got a crystal ball.

I have spent the weekend going to about 12 open house inspections, in the Morphett Vale, Christies Beach/Downs, Aldinga Beach areas, and found plenty of blocks that had subdivision potential, but I couldnt see anyone else doing it.

Why not spend a day using the search feature on this site,to answer some of your questions.Here a bit of reading for you.Know it off by heart,then go look at properties.
http://www.sa.gov.au/subject/Housin...nt development plans/Online development plans

 

[Erica]

The reason why there are not alot of back yard subdivisions going on out South and North is because there is already an abundance of vacant land in those suburbs, with large greenfields land releases in Seaford etc, Muno Para etc, which keeps values of land down. I've seen some land on the market well over 12 mths- with prices dropping in the last 2 years.

If I had the equity to spend up to $500,000 on a large block where you can cut off the back yard i'd be looking as close to the CBD as possible. Kurralta Park, pockets of Plympton and Richmond for example have good council zoning with min blocks 270 meters sq (check online development plans for council zoning at planning.sa.gov.au. City of West torrens ) Along Anzac HWY and along Brighton Rd council is open to higher density as it is a main transit coridore.

Other suburbs such as Findon, Seaton, Fulham, (City of Charles Sturt), you will see examples of corner block cut offs and hammerheads (I'm from the Western suburbs myself so am probabally biassed to this side.) There also seems to be alot of progress around inner north like Blair Athol.

 

[Schmiechen]

Thankyou so much Erica, I really appreciate your reply. I think I will definately take your advice on board and start to look closer to the city. Thanks again. Have you done this type of development before?

 

[eKwatee]

Is your $500k borrowing needed to pay for the subdivision and the building of the new dwelling on the back.

I would just look for corner cut offs, retain the house to renovate during the subdivision process, and sell the land, then repeat. Why go through the lengthy build process before you can release the funds.

If you just sell the land off without building on it, you can start advertising the land for sale as soon as the approval has been granted by the council, then you'll be ready to settle as soon as the titles are issued. Then sell the house once the renovation is complete, both renovation and subdivision should take you around the same time.

 

[Erica]

Yeah I've done one subdivision in Morphett Vale, I bought at the height of the market in march of 2010, I looked down south due to limited funds for investing so needed cheap entry price (under $300k), so I have been watching this market closely over the 2 years that it has taken, I have learnt the hard way that land out there doesn't sell fast and prices have dropped, so althougth I originally planned to subdivide and sell the block for a profit i have watched values fall and realised that selling will be unproffitable at this stage, so I have commited to build on the block. If I knew 2 years ago what I know now, I'd have bought closer to the city, and I certainly plan to do so when I have enough equity to do it again.

Tips I can share with you- which I have learnt about the hard way:
1. buy CORNER block (cheaper and easier than hammerhead, althought fewer available)
2. FLAT land only, (again cheaper and easier without retaining, cut and fill of site)
3. NO SIGNIFICANT TREES (althougth you can remove them if they are within 10m of house it'll still eat into prfit margin to have them removed)
4. butget for it taking WAY LONGER than you ever imagine, I still havent got the new titles and it has been 2 years now, there is no way you can speed up the process, they are, after all, governent departments you are dealing with.
5. Get a good EXPERIENCED SURVEYOR, he will be worth his weight in gold guiding you throught the process. And get your surveyor to look at the land title before the end of cooling off period expires- if I'd have done that I would have found out I needed to create a sewerage easement across the land and not bought it in the first place.

Good luck with your investing, you might make mistakes along the way- I've made LOTS, but it's all one big lesson.

 

[Brady]

Re; $500k finance is that with you being made redundant and not employed?

Or was that figure obtained whilst you were working?

 

[Schmiechen]

My partner is still working in Roxby Downs and earns gross 108k, so the 500k loan is the max amount of money we can borrow together. This loan is taking into account our IP in Darwin, and using the equity from that. We have a net equity of 180k, which includes 85k savings. So we would need to use some of our savings to contribute for a deposit.

 

[Schmiechen]

Thanks heaps again for the tips Erica, every tip helps.

To answer your question eKwatee, the $500k, is the purchase cost. Once I have subdivided (which i think i will need to pay for out of my own pocket) I will then be able to get another loan for the build out the back/side. As the bank will use the new block of land as security for the build loan. I hope this makes sense.

 

[underdev]

Hi Schmiechen,

I have studied Dymphna's course. Be careful it is not as easy as she makes it out to be. Many students she used as examples that have replaced their income in under 6 months all bought in Moranbah, Dysart and Blackwater! Not so good now! She directs people to CSG projects, however once construction is complete in the basin there will only be minimal maintenance staff - not good. Having said that I have learnt allot from her course.

Do as jim1964 said learn council’s development plans and you will see more deals than you know what to do with. I have generally found that in Adelaide ROI on developments at this time in the market are poor.

One tip is look at old housing trust homes. Many councils want them gone! Thus they have rezoned these areas to medium residential many blocks you can fit 4 row houses on.

Another is the new affordable housing scheme which is now adopted in most council development plans. If you can build under the requirements concessions are granted by council for smaller blocks and frontages!

Take your time, set your goal and strategy, the numbers do not lie.

There are great opportunity’s interstate. Why not Roxby where you work? Yes BHP has held off but I personally think if you find the right deal things will pick up and who knows with Linc energy and the lift on woomera prohibition area.

Don't limit yourself to average deals just because you live in Adelaide, get out there and have an adventure, it’s all part of the fun.

If you want to know what I have done pm me, more than happy to share.

 

[Erica]

geez I'd have liked to have bought this:

http://www.realestate.com.au/property-house-sa-north+brighton-112721015

City of Holdfast Bay, policy- Residential activity node (being on Brighton rd, main transit coridore), 200m sq minimum for semi-detached blocks allowed, this land could have cut off 2torrens titled blocks at the back for townhouses and retained the existing home at the front (with a new driveway to the front house and maybe demolishing the extra extension at the back of the existing house to get your setback and 20% private open space requirement.)

Just something to get you thinking outside the square.

 

[sultar]

+10000 Erica, I'm a big fan of your posts about IP. I'm looking for my first home cum IP in one of the suburbs in western Adelaide. Hopefully all goes according to my plan of acquiring the property and sub-dividing it after couple of years and then hunt for next.....All the best with your endeavours....

 

[matto_]

@ op

How did you find the dymphna course?

Bit concerning if after studying the course a participant so needs the wisdom of a free resource like somersoft.

 

[Corey Batt]

Even though the poster put this up a little while ago and probably won't read this, for future readers it is very important to note that battleaxe developments aren't viewed from an occupier/buyer sense with much positivity. They may be useful for yield and refinance-top up development, the resale value and ability to sell to make hard gains may be difficult and require a writedown of significant paper equity.

Corner block cut-ups on the other hard don't seem to have much issues, it's all about the design and having frontage methinks.

 

[Erica]

Cheers Sultar, glad you are finding my posts helpfull.

Here are a couple of recent subdividable blocks sold recently in Adelaide western suburbs:

No 1. sold for $458,000 in January
a corner block 774m sq total
this property is in a zone allowing 250 m sq minimum detached blocks
http://glenelg.ljhooker.com.au/7ANGW0

No 2. sold for $475,200 in Feb
a regular block 1052m sq total
this property is in a zone allowing 340m sq minimum for detached dwellings, (excluding the driveway of a hammerhead block,) and min width of hammerhead driveway required is 4m
http://www.realestate.com.au/property-house-sa-richmond-112336275

 

[Erica]

I agree with CJay,

Corner block back yard cut offs are quicker, easier and have the better profit margin. Although having said that, they are hard to get hold of, not many come on the market.

However I do believe there is still money to be made with battleaxe back yard cut offs within 10km of Adelaide City CBD, the rental demand must be high, and vacant land must be scarce, plus nearby to services/amenaties etc, as always good due dilligence, and knowing your end value by looking at comparable sales, so as not to spend too much to purchace in the first place.

 

[evisional]

My subdivision diary

Subdivision is not as too hard as many people say. All you what have to do is to find an experienced draftman or surveyor and ask him/her to handle the whole process for you.

Check my My Subdivision Diary here

 

[Corey Batt]

I agree with CJay,

Corner block back yard cut offs are quicker, easier and have the better profit margin. Although having said that, they are hard to get hold of, not many come on the market.

However I do believe there is still money to be made with battleaxe back yard cut offs within 10km of Adelaide City CBD, the rental demand must be high, and vacant land must be scarce, plus nearby to services/amenaties etc, as always good due dilligence, and knowing your end value by looking at comparable sales, so as not to spend too much to purchace in the first place.

Indeed. There are some fantastic 'battleaxe style' developments with townhouses within the 5 minute radius of the city, however they aren't really fitting with the traditional small blocks, usually two large blocks connected. I can understand those developments, as they still provide a level of space without the constricted narrow driveways and front doors opening up onto the neighbours rear fence.

And people will rent anything to say they live in the inner suburbs.