sell with DA or hold & rent

[tegosands]

Hi. Thank you all for this great forum.

We are hoping to get some feedback.

We have an old house sitting on a res B block. We are currently living in it It has a DA & BA in place which is valid until June 2008. It has been approved under the older town plan so it has 50% site coverage and all the old building codes apply..(no expensive head works etc) Also as everything is ready to go, there is no long 18 month delay in approvals & starting the project, so it should be desirable for a builder/developer

It was our plan to develop and sell the duplex's. However the building costs have blown right out (close to 1 million) and we could sell it now with out doing anything and probably make more on it than if we put ourselves through the development drama and hope it works out all ok.

A builder submitted a contract to buy, but it is falling short by about $20K. If we keep it and fix it up for rental we could hold and this could be the start of our PI portfolio. We would then buy another house, in our area needing work and work on it, upgrading then selling etc etc.

The contract is around $650,000 and we owe $250,000. So we could cash up and go use this to buy different properties. Or we could use our equity on this, keep it and move into another property anyway. Hopefully continue to reap the rewards of rising property values

The house is 1 door back from the broadwater and has some views through the park and across the water, the area is great and very desirable.

Been tossing this around for a while now, your valued feedback would be appreciated.

Regards.....

 

[steveadl]

There's no right or wrong answer. If it was me, I'd keep the property, and use the equity as you mentioned to get into the next IP(s). Since you've held it for a while, the rent may also cover or come close to covering the expenses of the property.

It will always be a good development block whether it is done now or in another 5yrs (even if you are just selling then and still not doing it yourself), and may even become more economically attractive for you to do yourself down the track.

 

[bradje]

Hi tego,
You should have a look at this thread.....
http://www.somersoft.com/forums/showthread.php?t=35641

Cheers,
JB

 

[toony]

You may able to extract a premium from a builder. Builders know it costs time and money to get the planning permits in place. If it takes them 12 mnths then its 12 mnths of holding costs.

Stick to your guns and dont be surprised if the builder comes back.

 

[wylie]

If the current approval expires and a new approval means a developer has to relodge, would they then be up for headworks? If so, it would be much more attractive now than if the approval lapses.

Having said that, it will no doubt always be a desirable development block, so you have to weigh up your own circumstances.

Can you speak to a developer and ask him what it is worth now as opposed to if the approval expires and it has to be relodged under the new rules?

Could you ask for an extension to give you more time to make a decision?

Wylie

 

[tegosands]

You may able to extract a premium from a builder. Builders know it costs time and money to get the planning permits in place. If it takes them 12 mnths then its 12 mnths of holding costs.

Stick to your guns and dont be surprised if the builder comes back.

Thank for reply Wylie,

Yes headworks & infrastructure costs have gone up considerably.
Also the new town plan only allows for 40% coverage. This DA has 50%.

Have already had extension on the DA so it lapses in June if not underway by then.

Meanwhile are in further negotiation and we'll see how this pans out and also looking out for another IP.

Regards...........
PJ