There is a property for sale in an outer suburb of Adelaide.
It's a very fast growing area.
The property is 200m from a cinema, across the road from a large park, 400m from a high school, 500m from shops, and buses to the city go past the front gate.
There's a decrepit building on the land, which is 2800sq. m.
the house is currently rented to longterm tenants for $250 per week. They don't ask for any repairs because the rent is cheap, and they are happy to stay or go.
Council has approved subdivision into 3 lots of 800sq m each, subject to a few standard conditions, such as paving driveways and connecting to utilities. The agent says that council would probably approve subdivision into 4 lots of 600sq m each + 400 sq m for the shared driveway.
Around the corner, a 600sq m block sold for $171K last December.
Two weeks ago the asking price was $395K.
I inspected the property and offered to buy a 12 month option on it for $423K.
The owner's response was to ignore my offer and lower the asking price to $370K.
I'm interested in investing in this with a silent, moneyed partner. I would do all the work re organising subdivision contractors, with the other partner putting up all the cash.
Here is how it could pan out, assuming it took a year to subdivide and sell:
Price
Price of Land $370,000
stamp duty $18,500
Land Broker Fee $1,000
Subdivision Costs
Crossover $1,000
Sewerage Connection $15,000
Electricity Connection $15,000
Pave Driveways $10,000
Planning & Development Fund Levy $15,600
Council Rates – 1 year $6,000
Emergency Services Levy $800
Surveyor Fees $2,000
Town Planner Fees
Development Application Fee $1,000
Community Title Lodgement Fee $500
Subtotal $456,400
Interest – 1 year @6% $27,384
Advertising $2,000
Selling Agent Commission $13,000
Total Cost $498,784
Income
Sale of 4 blocks @ $157K each $628,000
Profit $129,216
Split
Investor $64,608
Manager $64,608
Investor's Return on Equity 12.95%
If you had a spare $500K, would this be an attractive opportunity for you?
It's a very fast growing area.
The property is 200m from a cinema, across the road from a large park, 400m from a high school, 500m from shops, and buses to the city go past the front gate.
There's a decrepit building on the land, which is 2800sq. m.
the house is currently rented to longterm tenants for $250 per week. They don't ask for any repairs because the rent is cheap, and they are happy to stay or go.
Council has approved subdivision into 3 lots of 800sq m each, subject to a few standard conditions, such as paving driveways and connecting to utilities. The agent says that council would probably approve subdivision into 4 lots of 600sq m each + 400 sq m for the shared driveway.
Around the corner, a 600sq m block sold for $171K last December.
Two weeks ago the asking price was $395K.
I inspected the property and offered to buy a 12 month option on it for $423K.
The owner's response was to ignore my offer and lower the asking price to $370K.
I'm interested in investing in this with a silent, moneyed partner. I would do all the work re organising subdivision contractors, with the other partner putting up all the cash.
Here is how it could pan out, assuming it took a year to subdivide and sell:
Price
Price of Land $370,000
stamp duty $18,500
Land Broker Fee $1,000
Subdivision Costs
Crossover $1,000
Sewerage Connection $15,000
Electricity Connection $15,000
Pave Driveways $10,000
Planning & Development Fund Levy $15,600
Council Rates – 1 year $6,000
Emergency Services Levy $800
Surveyor Fees $2,000
Town Planner Fees
Development Application Fee $1,000
Community Title Lodgement Fee $500
Subtotal $456,400
Interest – 1 year @6% $27,384
Advertising $2,000
Selling Agent Commission $13,000
Total Cost $498,784
Income
Sale of 4 blocks @ $157K each $628,000
Profit $129,216
Split
Investor $64,608
Manager $64,608
Investor's Return on Equity 12.95%
If you had a spare $500K, would this be an attractive opportunity for you?