I bought an old do-up on a corner site for $88,000. The house sat at one end of the land, leaving room behind it to build two standalone units. The section had a mild slope, but it ran the right way — gravity-fed stormwater and wastewater, and the daylight rules worked cleanly against the standard footprint I was building to. Legals and a site survey came to $25,000. Each of the two new units cost $85,000 to build.
I sold the existing house for exactly what I'd paid for the whole site — $88,000 — the same pattern that had worked before: let the existing dwelling recover the purchase price, and let the new builds carry the margin. The house went to a buyer happy to renovate it to their own taste; since the exterior was already in reasonable condition and the new units had their own separate road access, there was no need to spend anything dressing it up. It simply looked like the house next door.
The numbers
| Purchase (whole site) | −$88,000 |
| Legals & site survey | −$25,000 |
| Construction — Unit 1 | −$85,000 |
| Construction — Unit 2 | −$85,000 |
| Sell existing house | +$88,000 |
| Sell Unit 1 | +$120,000 |
| Sell Unit 2 | +$120,000 |
| Net result | +$45,000 |
The plan going in was to sell the existing house to recover cost, sell one unit to cover the rest of the build, and hold the third dwelling long-term on a small amount of debt. Then the 1987 share crash hit, interest rates went ballistic, and the market for holding anything simply disappeared. Both units sold instead of one. I'd have liked to keep one of them — but a plan has to bend to the cycle it lands in, not the other way round.
The best part of this deal, though, had nothing to do with the build.
Driving past the site one day, I spotted a different agency's sign on it — not the agent I'd bought my previous few properties through. Rather than let that relationship go cold, I rang the listing agent directly, introduced myself, and suggested he run a joint agency arrangement with my usual agent. His own agency didn't pay its performing agents as well as Barfoot & Thompson paid theirs — so splitting the commission with a Barfoot's agent actually put more in his pocket than staying the sole listing agent would have. My own agent, who was overseas on holiday at the time, came home to find he had a sale waiting for him.
Everybody came out ahead — the listing agent earned more than his own structure would have paid him, my agent got an easy win he hadn't lifted a finger for, and I got the site. That's not a coincidence you can force; it's what happens when you think about the deal as more than just the numbers on the contract.