Demolition and Subdivision

[Pilchard_Adams]

Hey am looking at investing in an old weatherboard house on a large block of land, smashing it down, subdividing, and then building 2 houses and selling for the profit.

Has anyone ever done this? Does anyone know the:

Demolition costs? Im guessing around 10k

Subdivision fees? Heard around 20k

time it takes for subdivision to be approved?

 

[Frodo]

Never done it, but I'm told that in demolition, if you give them the right to the stuff demolished, then it's not too expensive.

 

[carmi99]

Never done it, but I'm told that in demolition, if you give them the right to the stuff demolished, then it's not too expensive.

The demolition costs should be the least of his concerns.

Sounds like it's his first foray into property development and it's a big project for a first attempt. He should be looking at doing a small renovation or something similiar.

There are so many things to consider and so much to learn. What courses has the OP done. What research has he undertaken. What sort of team does he have behind him. Is he going to do this full time of hire a property development manager. Does he have the avialable funds to ride out 12-18 months without recieving any rental money. This is just the tip of the iceberg.

If it's his first attemp and he is really keen on doing this project he must use a property development manager. Using an experienced manager on your first project could be the difference between making a 3%-4% profit or a loss. A good one will have many contacts and things like gaining permits will be that much easier.

And it's a bit hard to answer his questions without knowing more about the property and location. One thing i do know though is he should be allowing an absolute minimum of six months to subdivide the block and arrange appropriate titles, plus the time it takes to build the home.

The best advice i can give is not to be suckered into thinking property development is easy money. This is the undoing of so many novices. It;s hard work and hard to make a profit. Even the most experienced professional developments make mistakes on each project they undertake.

 

[Pilchard_Adams]

The demolition costs should be the least of his concerns.

Sounds like it's his first foray into property development and it's a big project for a first attempt. He should be looking at doing a small renovation or something similiar.

There are so many things to consider and so much to learn. What courses has the OP done. What research has he undertaken. What sort of team does he have behind him. Is he going to do this full time of hire a property development manager. Does he have the avialable funds to ride out 12-18 months without recieving any rental money. This is just the tip of the iceberg.

If it's his first attemp and he is really keen on doing this project he must use a property development manager. Using an experienced manager on your first project could be the difference between making a 3%-4% profit or a loss. A good one will have many contacts and things like gaining permits will be that much easier.

And it's a bit hard to answer his questions without knowing more about the property and location. One thing i do know though is he should be allowing an absolute minimum of six months to subdivide the block and arrange appropriate titles, plus the time it takes to build the home.

The best advice i can give is not to be suckered into thinking property development is easy money. This is the undoing of so many novices. It;s hard work and hard to make a profit. Even the most experienced professional developments make mistakes on each project they undertake.

Im only 25 so havent done a whole lot with property yet. I bought a house when i was 18, fixed it up, and have been renting it out for the last 2-3 years. It has doubled in value so I have a bit of equity and would like to invest in something else.

At the moment I am looking at a house that is $300,000, want to smash it down, subdivide, and then either sell the land or sell one block, and use that money to build a house on the other to sell.

I havent investigated a whole lot but have decided that I could:

- Rent the house out for first 3 months as demolishers are fairly busy. The house is currently tennanted.
- Subdivision would take a further 3 months, or so I am told thats the ball park time frame.
- Same size blocks are selling for $190 - 200k
- Houses less than a year old are selling for 390-410k (no gardens) in this area, and are on blocks people have already subdivided.

So at the moment I would estimate
315k for house plus fees
10k for demolishers
20k for subdivision fees
10k for loan repayments (would be significantly less with tennants renting it for 3 months)
20k for anything else that may pop up

Total expense would be around $375K

Sell both blocks for 200k each = 25k profit

OR

Sell one block fast at $185K, build a house on the other for around $140 including basic yards etc

375 minus 185 = 190K
add house of 140k = 330k debt

add the expense of the home loan while it is building of around 15k max

Total debt of 345K and sell house for $410 - $420 for a profit of about 65 - 75K

Its all just speculation based on word of mouth and my own studies watching other properties in the area.

The larger problem is that I just took a payout from work to quit, and banks wont be too keen on me when I dont have full time employment. I have a small business that has gone from a profit of 150 a week to 500+ a week in 12 months, and will continue to grow. So I will probably wait 12 months before getting into something like this. Just doing a bit of research now.

 

[SirJimi05]

Im only 25 so havent done a whole lot with property yet. I bought a house when i was 18, fixed it up, and have been renting it out for the last 2-3 years. It has doubled in value so I have a bit of equity and would like to invest in something else.

At the moment I am looking at a house that is $300,000, want to smash it down, subdivide, and then either sell the land or sell one block, and use that money to build a house on the other to sell.

I havent investigated a whole lot but have decided that I could:

- Rent the house out for first 3 months as demolishers are fairly busy. The house is currently tennanted.
- Subdivision would take a further 3 months, or so I am told thats the ball park time frame.
- Same size blocks are selling for $190 - 200k
- Houses less than a year old are selling for 390-410k (no gardens) in this area, and are on blocks people have already subdivided.

So at the moment I would estimate
315k for house plus fees
10k for demolishers
20k for subdivision fees
10k for loan repayments (would be significantly less with tennants renting it for 3 months)
20k for anything else that may pop up

Total expense would be around $375K

Sell both blocks for 200k each = 25k profit

OR

Sell one block fast at $185K, build a house on the other for around $140 including basic yards etc

375 minus 185 = 190K
add house of 140k = 330k debt

add the expense of the home loan while it is building of around 15k max

Total debt of 345K and sell house for $410 - $420 for a profit of about 65 - 75K

Its all just speculation based on word of mouth and my own studies watching other properties in the area.

The larger problem is that I just took a payout from work to quit, and banks wont be too keen on me when I dont have full time employment. I have a small business that has gone from a profit of 150 a week to 500+ a week in 12 months, and will continue to grow. So I will probably wait 12 months before getting into something like this. Just doing a bit of research now.

You sound like you've got a good head on your shoulders and have done some reasonable research.

You also passed a very important test imo. You aren't deluded into thinking you are going to make 100's of 1000's of $ for one relatively small development. This is a big problem for many that get into the game.

One important piece of advice that carmi99 gave is the bit about hiring a property development manager. They are worth their weight in gold. Don't be distracted by the cost. They will save you money in the long run. Although, you said that you are currently out of a job so if you could dedicate yourself full time to the project it may not be needed.

I would advise doing a course. I think TAFE now runs 6 month part time courses. I have heard really good things about them. If thats too long there are plenty of small 1-2 day courses about. Definitely worthwhile. Plus read a book or two.

Good luck with it mate.

 

[Pilchard_Adams]

You sound like you've got a good head on your shoulders and have done some reasonable research.

You also passed a very important test imo. You aren't deluded into thinking you are going to make 100's of 1000's of $ for one relatively small development. This is a big problem for many that get into the game.

One important piece of advice that carmi99 gave is the bit about hiring a property development manager. They are worth their weight in gold. Don't be distracted by the cost. They will save you money in the long run. Although, you said that you are currently out of a job so if you could dedicate yourself full time to the project it may not be needed.

I would advise doing a course. I think TAFE now runs 6 month part time courses. I have heard really good things about them. If thats too long there are plenty of small 1-2 day courses about. Definitely worthwhile. Plus read a book or two.

Good luck with it mate.

Cheers mate, will do. I did a few day courses on managing rental properties and other investing classes. Nothing massive but I manage my rental myself and havent had a problem touch wood. I will have a look at some courses next week