Property finance possible subdivision

Hi,

I've included this post in the adding value forum as well.

I have a few questions that I am hoping someone might be able to help with.

Firstly, and most importantly (because it may determine whether the subsequent questions are even worth asking!) - can anyone tell me how to determine development potential of a block in Palm Beach, Gold Coast? More specifically, a family member is on a 700sqm block and is looking at moving. I love the idea of purchasing the house, but need to determine whether it's worthwhile or not (i.e. what exactly the value-adding potential is - duplex? subdividable? or just big reno)

Secondly, and this might be more appropriate for the property finance category - I need some suggestions on how we could make it happen and if it's even possible.

This is our present situation:
Own a house in Brisbane - bought for 435k, did 50k reno (husband did most of the work), refinanced earlier this year to purchase first IP and was valued at 550k. Since then we have put another 15k into deck/roof/fence and landscaping.
Purchased first IP near Redcliffe (north brissie) in October. Paid 450k for it, put 15k in, very good rental yield for the area (5.4%).
FINANCE: Currently have 440k on PPOR (130k used to finance deposit/costs for IP) and 360k on IP.
We borrowed at 80%, so understand our options may be limited...

The house on the Coast is probably worth 600k.

I am wondering if anyone has suggestions on how whether there's any way we could finance purchase of the relative's house without selling our PPOR/IP (even creative ideas like vendor finance?) or whether we bite the bullet and sell the Bris house (we've made good capital gains, considering we did a lot of the reno ourselves, but I'm sure there's many more to come) and hope that developing the block on the Gold Coast will give us even more gains?

We are more than prepared to live in the house as is for a while, until we can get things going and we also have the option of living with my parents for 6-12 months if absolutely necessary to save some money.

Thoughts? Do you need any more info? Any advice welcome.

Thanks
 
Hey Libos04,
I will leave the finance side of things to the professional brokers on this forum but just to answer your other questions.

Firstly regarding the blocks potential then your first point of call needs to be the council. You can easily access Zoning Regulations on their website which will give you a quick indication of what is possible regarding subdivision and development. But pick up the phone and just have a chat with the council, discuss the block in detail and get as much information as possible. Be sure to ask questions about easements, sewerage and storm water connections.

Then there are plenty of other considerations such as block orientation, slope, driveway access, off-street parking considerations.etc.

Also I must say buying from family does also raise concerns. Ultimately when searching for an investment your goal should be to try and secure a property for the best deal possible. Your should be using all your knowledge and skill to negotiate the deal. The concern with purchasing from family is you also want them to get the best deal possible. So it makes it very difficult because you both clearly want different outcomes. You want to buy for as cheap as possible and they want to sell for as much as possible.
Me personally I would not get involved with buying a home from a family member, I think there are so many good deals out there that it's just not required.
 
If you don't have any cash savings you could potentially pay LMI (depending on who your current lender is) and get some more out of your current properties but it will be expensive - 3 lots of LMI including the new purchase. Assuming your income + rents supports it.

And then you'll need money to develop too.

Whether it's worth it depends how good the deal could be, risk appetite, future plans...etc.

But like Albanga says, business with rellies....don't do it. To much can go wrong. Unless you don't like them, then it's fine :D
 
Hi,

I've included this post in the adding value forum as well.

I have a few questions that I am hoping someone might be able to help with.

Firstly, and most importantly (because it may determine whether the subsequent questions are even worth asking!) - can anyone tell me how to determine development potential of a block in Palm Beach, Gold Coast? More specifically, a family member is on a 700sqm block and is looking at moving. I love the idea of purchasing the house, but need to determine whether it's worthwhile or not (i.e. what exactly the value-adding potential is - duplex? subdividable? or just big reno)

Secondly, and this might be more appropriate for the property finance category - I need some suggestions on how we could make it happen and if it's even possible.

This is our present situation:
Own a house in Brisbane - bought for 435k, did 50k reno (husband did most of the work), refinanced earlier this year to purchase first IP and was valued at 550k. Since then we have put another 15k into deck/roof/fence and landscaping.
Purchased first IP near Redcliffe (north brissie) in October. Paid 450k for it, put 15k in, very good rental yield for the area (5.4%).
FINANCE: Currently have 440k on PPOR (130k used to finance deposit/costs for IP) and 360k on IP.
We borrowed at 80%, so understand our options may be limited...

The house on the Coast is probably worth 600k.

I am wondering if anyone has suggestions on how whether there's any way we could finance purchase of the relative's house without selling our PPOR/IP (even creative ideas like vendor finance?) or whether we bite the bullet and sell the Bris house (we've made good capital gains, considering we did a lot of the reno ourselves, but I'm sure there's many more to come) and hope that developing the block on the Gold Coast will give us even more gains?

We are more than prepared to live in the house as is for a while, until we can get things going and we also have the option of living with my parents for 6-12 months if absolutely necessary to save some money.

Thoughts? Do you need any more info? Any advice welcome.

Thanks

Hi Libos,

I live on the Gold Coast and really think that Palmy will take off in the next couple of years - just have to move that centrelink office.

A lot of lenders will do 95% on an resi investment property and you can probably get up to 90% cash out on the existing properties if you really want the asset. You will have to pay LMI though.

I guess you need to sit down and see if you can actually afford the debts, you would be highly geared - but I don't know your personal situation so I am just making a broad sweeping statement.

The GCC are actually quiet good at the moment getting DA's through with Tom Tate at the helm but it would need to fit in with the existing Palm Beach plan (available on council website).

You could always negotiate vendor finance, but I imagine that the existing owner would want to lodge a caveat or a second mortgage over the property to protect their interest which would restrict you doing anything in the future without their consent.

Perhaps a call option could work which would give you the option to buy the property but not the obligation. You could have a 6 month option subject to you getting a DA etc.

Cheers
 
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