1. Client Brief
Referred by their mortgage broker, a busy professional couple came to Capital Property Advisory (CPA) initially looking to acquire an investment property with a view to hold it long term. CPA were engaged to provide acquisition and property management services. The clients saw the benefit in engaging CPA as they wanted to increase their exposure to property, but, with two demanding jobs, were very time poor. On the back of our diligent research and search process our acquisitions team was able to source and secure a fantastic rental property in an area we felt would outperform from a growth perspective. We were able to acquire a site not widely recognised as having subdivision potential, utilising a ‘corner lot planning control policy’ that was relatively unknown at the time – those in the dark included the seller and their local agent. This would turn out to be a substantial win for our clients as the property had not been priced to reflect its true potential.
2. Research, Search & Negotiation of Price & Terms
The property was secured on market for $537,500 – we didn’t want to risk another buyer with the knowledge we possessed, beating us to the punch. We extended our “due diligence period” in order to obtain additional information from the local council – this proved prudent as we discovered that one of the external structures was not council approved – something we leveraged to reduce the price by several thousand dollars more to cover the cost of retrospective approvals. As it turns out, our client was able to pocket this saving, as we decided soon after to demolish the dwelling and develop the site in the short term. This decision was made in consultation with the client after we realised how profitable the site was, based on securing a duplex lot at the price of a single residential lot.
3. Design and Subdivision
The target property had several elements that caught the attention of the buyer’s agent, not least of which the aforementioned corner lot policy that enabled the site to be subdivided. A number of subdivision options were modelled before finding an option that worked for the client, from both a feasibility and risk profile perspective. CPA ran four different feasibility options including: 1) subdividing into two lots for sale to the market, subdividing and developing two townhouses, 2) subdividing and developing a townhouse and 3) selling the remaining parcel of land to market and finally, the adopted option, 4) subdividing and developing a single level villa and selling the remaining lot to market. We pride ourselves on our attention to detail and our strict process-driven approach ensures we can quickly and efficiently review all potential development outcomes on a site, in line with State and local council planning regulations, while factoring in sub-market supply and demand and potential feasibility outcomes to ensure the final result is the best for the site, the target market, and most importantly… our client.
4. Development Outcome
Our clients are delighted with the built form designs and financial outcomes. The client’s brief was to develop and hold the single villa we had created, after selling the adjacent vacant lot. The CPA Leasing team were able to access the site pre-handover due to our builder relationship and were able to launch an advertising campaign that included an amazing 3D Virtual Tour for prospective tenants. We were inundated, with over 40 enquiries and more than a dozen applications after the first viewing. We had appraised the property at $420 per week, advertised for $450 and eventually, through negotiation with several quality tenants, achieved $500 per week – resulting in a yield on the new villa of almost 5%. The client is already engaged to find their next site and could not be more pleased with their decision to engage a team of independent professionals to ensure they achieved their goals. If you would like a closer look at the completed project, check out our 3D Virtual Tour HERE.