{"id":8111,"date":"2016-05-29T10:00:57","date_gmt":"2016-05-29T00:00:57","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8111"},"modified":"2016-05-29T10:00:57","modified_gmt":"2016-05-29T00:00:57","slug":"finding-real-estate-gold","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/finding-real-estate-gold\/","title":{"rendered":"Finding real estate GOLD!"},"content":{"rendered":"

So, you\u2019ve found what appears to be the perfect \u201csplitter block\u201d for your first potential property project.\u00a0To help with the due diligence, Nhan Nguyen<\/strong>, from Advanced Property Strategies, runs through his checklist of items to ensure the project is viable.
\nTranscript:<\/strong>
\nKevin:\u00a0 <\/b>Say you found what appears to be the perfect splitter block for your first potential property project. Maybe not; maybe you\u2019ve done it before. Well, we\u2019re going to talk about due diligence with splitter blocks now. Nhan Nguyen from Advanced Property Strategies has had a lot of experience with this and helped many people do it. We\u2019re going to ask him some questions about due diligence.
\nNhan, thank you very much for your time.<\/b>
\nNhan:\u00a0 <\/b>Excellent, mate. Thanks for being here.<\/b>
\nKevin:\u00a0 <\/b>How do we go about finding a splitter block, Nhan?<\/b>
\nNhan:\u00a0 <\/b>One of the easiest ways to find splitter blocks is you need software, which is the ability to see \u2013 x-ray vision as I say. We use PriceFinder or RP Data; they\u2019re subscription programs that you can use, and it allows you to integrate with Google Maps and see what double blocks look like from an aerial view, because they\u2019re all there.<\/b>
\nKevin:\u00a0 <\/b>Are all double blocks the same?<\/b>
\nNhan:\u00a0 <\/b>No, definitely not. There are a handful of different types. One is what we call the widow block, so two triangles added together; it becomes a big rectangle. That\u2019s what\u2019s called a widow block. They can be a bit more cumbersome and you may need to get a development approval, or reconfiguration as we call it, to make them usable.
\nThe standard splitter block that you have is a 20×40, and when you split them, you\u2019ll have two lots that are 10×40 each. The other block, which is the third option that you have, is a double block we call it in generic terms, but really, it\u2019s just one block that does need to be subdivided into two, and that\u2019s a 20×40 subdivision block.
\nThere\u2019s a technical difference between a splitter block and a subdivision block. The subdivision blocks, you actually have to get a development approval, because you\u2019re going from one into two and you\u2019re creating a new lot, whereas a splitter block is already on two titles and you don\u2019t have to get an approval as such.<\/b>
\nKevin:\u00a0 <\/b>Apart from finding out what sort of block it is, what other due diligence methods or steps should we take in terms of services?<\/b>
\nNhan:\u00a0 <\/b>There are two key parts to due diligence. With the services, you generally can check it out before you dig. There\u2019s a website \u2013 it\u2019s just 1100.com.au \u2013 and on that, you can log in and once you give the address, and it will spit out for you where the location of the services are.
\nGenerally, I use the five finger technique, where you look at the five services. There\u2019s water, sewer, stormwater, Telstra, and power. Generally, the connections that you have to connect straight away are the water and sewer. If it\u2019s what is called an infill block, where there\u2019s power and telephone directly nearby, then you may not need to worry about that, but generally, the main ones that people have to connect are water and sewer.<\/b>
\nKevin:\u00a0 <\/b>In your experience, Nhan, where have you seen potential developers go wrong with this? What could go wrong?<\/b>
\nNhan:\u00a0 <\/b>There are a lot of things that can go wrong. One of the reasons we suggest to beginning investors and developers to start with splitters is you don\u2019t need to get a development application most of the time, but one of the things that may stop you from doing the splitter block is the house may not be actually removable from a council regulation point of view.
\nIf it\u2019s built pre-1946 and the council have an overlay or a zoning where you cannot remove the house, the house may straddle both blocks and let\u2019s say it\u2019s brick, <\/b>part of it, but the council said \u201cNo, it\u2019s tin an timber in this part, and you cannot demolish it,\u201d for example, then you won\u2019t be able to realize those blocks, because you may not be able to move the house, or if the house is too big and you may not be able to cut it to make it fit on the block. That\u2019s definitely one part of due diligence that you need to check out if you\u2019re doing a splitter block.
\nThe other part is just knowing where the services are. With the services being across the road, for example, or around the corner, it may just cost you a bit more to be able to access those services and cost you a bit more in terms of designs. I actually had one client who did a splitter block but he had to move a manhole to make sure that the block was workable, and that just took a little bit longer, a fair bit more cost, and a bit more challenging time-wise.<\/b>
\nKevin:\u00a0 <\/b>In your experience, do you find that people who own these properties and they\u2019re aware that it is what we call a splitter block, do they end up having an over-inflated opinion of value \u2013 in other words, they say \u201cThis is two lots, so therefore it has to be double what it\u2019s worth now\u201d?<\/b>
\nNhan:\u00a0 <\/b>I find that most people actually don\u2019t know that it\u2019s on two lots, even though it\u2019s on their rates <\/b>notice \u2013 it says \u201cLot three and lot four\u201d or \u201cLot seven and lot eight.\u201d They may not be aware of it; they\u2019re just aware that the size is, let\u2019s say, 800 square meters.
\nYes, they definitely do inflate the price. They don\u2019t take into consideration the services, which might cost $10,000 or $15,000 at the higher end, and they don\u2019t take into consideration the ability or the cost to remove the house, which may be somewhere between $12,000 and $20,000 depending on the size of it, asbestos, and things like that.
\nYes, they generally just make up figures on \u201cOne block is worth this,\u201d they double it and that\u2019s what they sell it for, but there are a lot of expenses in between \u2013 stamp duty on the purchase, GST on the sale, holding costs, things like that. So as a developer and investor, there are so many other expenses that I need to take into consideration. Agent\u2019s commission on the selling end, as well.<\/b>
\nKevin:\u00a0 <\/b>Just in terms of expenses, those two you mentioned there \u2013 that is, removal of the property, if it can be removed, and\/or getting services to the lots \u2013 are they the two biggest expenses?<\/b>
\nNhan:\u00a0 <\/b>Yes, they are. They\u2019re the two biggest expenses from a cash outlay point of view, obviously from purchasing the property, stamp duty and agent\u2019s commission on the other end, as well as GST is a serious consideration, as well. Those other two costs \u2013 which are the services, which is the water and the sewer, as well as the demolition of the house \u2013 are other major costs there.<\/b>
\nKevin:\u00a0 <\/b>Nhan Nguyen from Advanced Property Strategies, great knowledge here when it comes to splitter blocks.
\nNhan, thank you for giving us your time today.<\/b>
\nNhan:\u00a0 <\/b>Absolutely, my pleasure. Thanks for having me, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

So, you\u2019ve found what appears to be the perfect \u201csplitter block\u201d for your first potential property project.\u00a0To help with the due diligence, Nhan Nguyen, from Advanced Property Strategies, runs through his checklist of items to ensure the project is viable. Transcript: Kevin:\u00a0 Say you found…<\/p>\n","protected":false},"author":176692471,"featured_media":8109,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[35,36],"tags":[101],"class_list":["post-8111","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property-development-topic","category-property-investment-topic","tag-podcast"],"yoast_head":"\nFinding real estate GOLD! - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/finding-real-estate-gold\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Finding real estate GOLD! - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"So, you\u2019ve found what appears to be the perfect \u201csplitter block\u201d for your first potential property project.\u00a0To help with the due diligence, Nhan Nguyen, from Advanced Property Strategies, runs through his checklist of items to ensure the project is viable. 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