Granny Flat OR Subdivide? (My ROI Winner 🏆)
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- เผยแพร่เมื่อ 18 ก.ย. 2024
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We are just in the process of purchasing 5 acres in a regional area on 2 lots for 700k with a large home on one block as a ppr. I plan on renovating existing house for 50k (kitchen only, bathrooms are done), building a relocatable home on the other lot spending up to 200k, and realigning the boundaries to keep 4 acres on existing house block.
So all in we would invest $950,000, and end value would be 1.2 mil ideally. So equity increase of $250k.
I think we probably paid slightly too much on the purchase but bank valuation was spot on and wife loved the place.
If we sell off the acre with relocatable home for 550k, we are left with a 350 sqm home with wrap around verandas, views to die for, on 4 acres, that only owes us 400k!
Having the extra title is a game changer!
Hi Luke,
Thank you for sharing your property investment journey so openly, I have found many learning points!
Could I ask you to help me understand something in your video?
Note I am a structural engineer not and accountant; But for the subdivide and dual occupancy option haven't you actually calculated the gross yeild not the net yeild? Likewise haven't you calculated the gross income not the net income?
There will be significant interest and holding costs associated with this 855k purchase which have not been accounted for in the net income and net yeild calculations, thus it would seem that your actual net income and net yeild on that option would be far less favourable than what the video purports, if not, what am I missing in my understanding here?
Which option would you choose? Granny flat or subdivide and build
Where can I find a cheap granny flat kit ? Can you share a link ?
Yay! Been hoping to see these two options compared in depth so thank you for making this video. 😊
I’m wondering though - how hard is it to add a granny flat or subdivide in Brisbane and Gold Coast area? My carpenter neighbour said it took his established builder boss a long time for get approval to build a granny flat in his property. I was thinking what more for ordinary people? 😅
What's your thoughts on relocatable homes - David Wright/MacKay and Sons etc? If you get a cheapish block and relocate a house you can put a 3 bedroom on it for say $150K or so.
I was also interested In this exact property for a granny flat, but was edged out by favourable terms haha. Now I know.
@jeffg939 sorry mate!
Thoughts on creating a sub dwelling without subdiving until later on?
Very likely what we'll do. Allows us to minimise the holding costs & cheaper build cost but have the option down the track to subdivide and sell front and back homes.
@@lukewiles1 Awesome, planning on the same thing. Thanks for the videos and going into the numbers for us. :)
Thought Logan city council restrict sub dividing? Im probably wrong
The cash flow would be horribly negative if you were to subdivide and build the dual occupancy on 80% Loan at 7.74% interest rate. You were assuming that the $620k build and subdivide costs are paid for in cash.
@kierangan7944 yes that's right. Assumed the development/granny flat would be in cash.
If you don't put any money in, can't expect to have a decent cashflow at 8% interest rates
Nice one Luke, personally I prefer a rooming house leveraged at 90% cash flow positive from day and pulling out equity upon completion once it’s revalued based on commercial yields. But subdivisions are great for sure!
May I ask how you pull out equity on completion?
Luke, what are the approximate costs to subdivide in Logan ?
In the video - I budgeted $70k. Going to be super dependent on the property & civil works required
Wait is there No land tax?
Not for me! Below the qld land tax thresholds