\nToday’s success story features a young man who together with his Dad did a 1 into 4 lot subdivision which involved a minor renovation of an existing house and creating 3 additional lots.
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Kevin<\/b>:\u00a0 Our success story this week deals with Brendan Brown. Brendan works as an area manager in Brisbane North, from the city out to Caloundra. Together with his dad, he did a one-into-four lot subdivision that involved a minor renovation of an existing house and creating three additional lots. Let\u2019s find out a little bit more about it.
\nBrendan joins us. Hi, Brendan. Thanks for your time.
\nBrendan<\/b>:\u00a0 Hi, Kevin. No problem at all.
\nKevin<\/b>:\u00a0 Tell me a little bit about the property. Where was it located, and why did you choose that area?
\nBrendan<\/b>:\u00a0 This particular property that I found is located in Tingalpa, so it\u2019s about 15 kilometers southeast of Brisbane CBD. I tend to look for properties within that range of the CBD, but one of the other main things was that it was surrounded by more premium suburbs. You have suburbs like Wakerley, Manly, Wynnum, Murarrie, Cannon Hill, and even Carindale and Belmont areas. They all circle around it.
\nYes, I really liked that. It was at a lower average price than those areas yet was surrounded by those more premium suburbs, so I saw some good opportunities for growth there.
\nKevin<\/b>:\u00a0 How big was the block of land?
\nBrendan<\/b>:\u00a0 It was 2023 square meters with a small two-bedroom [1:27 inaudible]<\/b> right at the front. It was a nice, big block of land.
\nKevin<\/b>:\u00a0 Just the single block, or had it already been divided into lots?
\nBrendan<\/b>:\u00a0 No, it was just one block, so on one title. We looked to get the approvals to split it into the four blocks and retain the house at the front.
\nKevin<\/b>:\u00a0 Was that something you knew you could do, or did it require a bit of investigation?
\nBrendan<\/b>:\u00a0 It does require a bit of investigation. I think a lot of the information is available to anyone. You have planning and development online and interactive mapping and all that sort of stuff.
\nI have a pretty good interest in small residential development, so I spend a lot of time studying city plans and that. They can get a bit complicated, but if you can decipher, it can at least give you a good guide as to what you can do with the property. I had an idea that I could split it into the four, but I would talk to my town planner to confirm that.
\nKevin<\/b>:\u00a0 Let\u2019s talk about money now. Let\u2019s talk about the purchase price, and I also want to know how long it took you to actually set it up and then get to the final stages. Firstly, let\u2019s talk money, the purchase price.
\nBrendan<\/b>:\u00a0 I had it under contract for $640,000. The good thing about that is I managed to get a two-months due diligence period, and that is definitely a positive in residential development. That basically gave me two months to research everything as well, so I could be confident that I could do all that research that you\u2019re talking about.
\nKevin<\/b>:\u00a0 Was that enough time?
\nBrendan<\/b>:\u00a0 Yes, that was enough time to do the research and the finance and all that. It would be pretty hard to get two months these days, so you probably normally have to try to do it a bit shorter than that, but the more time you can get, the better for that sort of stuff.
\nKevin<\/b>:\u00a0 In those two months, did you go unconditional after that stage?
\nBrendan<\/b>:\u00a0 Yes, I did. I did renegotiate a little bit, because I did discover in that due diligence, there was a bit more cost involved doing some roadwork and that sort of stuff, so I tried to renegotiate. The seller wasn\u2019t keen to budge, but I managed to get just an extra $5000 off. It all adds up, so it\u2019s worth renegotiating. The final price that we went unconditional on was $635,000.
\nKevin<\/b>:\u00a0 The end game here, of course, was to get three individual lots off plus the lot that has the house on it. Were you successful in doing that?
\nBrendan<\/b>:\u00a0 Yes, we were. It was advertised as splitting it into three, so I think a lot of people were maybe just looking at it based on what the real estate agent was telling them \u2013that you could keep the house in the front and get two lots in behind. But I managed to get the four lots out of it because it had a two-street frontage.
\nWith knowing that your minimum lot size for a normal low residential is 400 with the ten meter frontage, and this total site had 20 meter frontage, I got two of those narrow lots at the end that didn\u2019t have the house on it, and that is what got me the extra lot.
\nKevin<\/b>:\u00a0 Did you need to relocate the house at all?
\nBrendan<\/b>:\u00a0 No. That was the other good thing. The house was positioned right at the front of the other end, so I was able to retain that, on just over 400 square meters and then create a battle ax 600 square meter with access from that end out behind that. I guess total of about 1000 square meters for those two, and then just over 800 for the other two.
\nWe did lose a little bit in the land dedication to complete a cul de sac. That\u2019s what I was talking about before with the road works. It was an extra cost and we lost a bit of land, but it worked out.
\nKevin<\/b>:\u00a0 With that subdivision, you then have to get the services on there. What was the end cost of the development, and what did you eventually end up selling it for?
\nBrendan<\/b>:\u00a0 The end cost of the total project\u2026 The purchase price was $635,000. Like you said, the services, there is quite a bit involved in that. You need sewer, storm water, and water, and they\u2019re running a fair way on a big site like that. We ended up finding one coming in that did all that. It was about $120,000 to basically do all our road works, all our sewer \u2013 basically all the civil works \u2013 which was good. But we had some extra costs in electrical. Our total ended up being a total cost of $955,000.
\nWe actually ended up selling three of them, and we retained one of the blocks, but we did have a lot of demand on it. Quickly, the two bed house, we sold for $370,000, the 600 square meter rear lot for $285,000, one of the narrow lots for $280,00, and retained one of them. But if we did sell that for $280,000, our total sales would have been $1,225,000, which gave us a gross profit of $270,000. The total time was about 18 months. They take a bit of time, but it\u2019s still worth it for that amount of money in that time.
\nKevin<\/b>:\u00a0 As I understand it, you\u2019ve been able to hold on to one of the lots. Is that right?
\nBrendan<\/b>:\u00a0 Yes. That\u2019s what we did. That was my recommendation, and I think that has probably been a good thing with the way the market is going. We built just a low-set standard two-bed, two-bath property on that, and it\u2019s probably only a week or two away from completion.
\nAt the moment, it\u2019s just valued at that land value, the $280,000 plus the build cost, which was around $220,000, so about $500,000. But on completion, we\u2019ll get a re-val, and I\u2019ll be expecting a valuation of about $550,000 to even $600,000 based on the sales recently in that area. There is an equity gain just in holding and building.
\nKevin<\/b>:\u00a0 Absolutely. Will you hold it then, or will you then sell it?
\nBrendan<\/b>:\u00a0 Yes, I think the idea is to hold it and rent it out, because with interest rates the way they are, it\u2019ll easily be positively geared, and we can still pull that profit out by refinancing on the equity. Even though some of our cash is tied up in it, we\u2019re still releasing some of that profit and able to move it on to another project.
\nKevin<\/b>:\u00a0 Great story, Brendan. Thank you so much for sharing it with us, and all the best for the future too.
\nBrendan<\/b>:\u00a0 No worries, Kevin. Thanks for having me.<\/p>\n","protected":false},"excerpt":{"rendered":"
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