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Two adjacent ResB blocks for sale

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Iaminquisitive | 14 Jun 2013, 04:16 AM Agree 0
Thoughts please.

There are two houses for sale next to each other. Both are Queenslander style, ResB, and on 1012 m² blocks, and I think both are rented. One is asking $250,000 and the other $265,000. They are close to the centre of town, in fact are almost directly across the road from the local Red Rooster. Town of just over 7000 people. Strong industry, mining, peanut farming, big power station in the area. The town has plenty of infrastructure.

Would buying both blocks with a view to getting rid of the houses and building units after September be a good idea? Alternatively, buying both blocks and having plans for units put through? Thoughts, anyone?
  • Jodie | 14 Jun 2013, 09:21 AM Agree 0
    I'd go for both blocks and build units!
  • Eos Property | 14 Jun 2013, 09:36 AM Agree 0
    This is the sort of thing we do with clients in Perth and a couple of strategies we use to minimise risks and maximise returns for our clients are;

    1. Check the existing town planning scheme to see if there is appetite for higher density living in the area.
    2. Check the existing zoning of the blocks to see if development approval process can be accelerated. Having to get land re-zoned can sometimes expose yourself to all sorts of objections and delays.
    3. Check to see if there are plans to release new blocks in the area. Given the town only has a population of 7000 - it will not take the release of too many blocks to swamp the local market.
    4. You will also need to check with a broker to determine how much you can borrow - the location may provide a couple of finance hurdles for you. More so if the location is not blue chip and this is your first development.
    5. Speak to local real estate agents to determine likely on completion rental returns and sell prices. This will help you determine profitability and rent returns.
    6. If all looks OK then you'll need to start talking to architects, draughties, builders etc to determine costs.

    Certainly the opportunity to densify the blocks can be a highly profitable venture if your due diligence stacks up. The key is undertaking thorough due diligence.

    N.B. If your preliminary research stacks up then try and get a minimum unconditional clause of 90 days (or more) allowing you to do thorough due diligence before your reach the point of no return.

  • John Daryan | 15 Jun 2013, 01:58 PM Agree 0
    Where are they?
  • Iaminquisitive | 16 Jun 2013, 02:16 AM Agree 0
    Thanks for the responses.

    Jodie: yup, been thinking about it, and thanks!

    Eos Property, thank you for the advice. That appears very sound. Still deciding whether I want to go through all that or not, and I appreciate the response. I do plan to do due diligence as you state. If I do decide to proceed, I'll probably make an offer in the next week or so.

    John, the blocks are in Kingaroy. Do you know something of the area?
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