Young investor subdivides and conquers the housing crisis
A young property investor has taken an altruistic approach to property investing that delivers a profit while doing his bit to alleviate the housing crisis.
West Australian cleaning company owner, 28-year-old Dan Spasojevic, is a new ilk of property investor who expects yield from his chosen property investment strategy but is driven more by doing social good.
Deciding this week whether to sell the backyard block behind his Thornlie, Perth, home, which he’s almost finished subdividing, or build a dwelling there to sell, Mr Spasojevic’s singular goal is to play his part in easing the housing crisis.
Mr Spasojevic started subdividing his first property four years ago, funded by his residential and commercial cleaning business but has had a keen interest in property investment and ownership since his teens, listening to property podcasts, and reading books.
“I had the passion, but it took a while to getting around to get into it, and now the more I do it, the more I really enjoy seeing a project develop to the outcome, like on my previous subdivided property a family has built there already and they’re living there, so it’s quite interesting to see the full cycle of something that you’ve created,” he said.
He told API Magazine that homeowners everywhere play a pivotal role in addressing the housing crisis.
“It’s a passion I guess, and I have a real interest in the topic when it comes to subdivision but I’m doing this because I’ve got quite a lot of friends and family that live more than 60 minutes from the city - on a good day - who complain about the traffic, and if they could live somewhere closer to where they work they could save two hours per day, and 500 hours in a year,” Mr Spasojevic said.
Building further from city centres has solved housing shortages in the past, Mr Spasojevic said, but this approach is flawed due to the associated infrastructure costs and increased travel times and a better idea is finding solutions that utilise existing urban spaces more efficiently.
“At 150 kilometres long, Perth is the longest metropolitan area in the world, so the problem with going further and further out is wasting so much time travelling, and secondly, cost in terms of infrastructure, getting the properties connected to all your services, but also amenities like schools, transport hubs, shops; those things cost a lot.
“I’m trying to encourage people who live 20 or 30 kilometres away from the CBD to look at their own properties and consider how can we do something to help, and you’ve got so many properties out there that are four- or five-bedroom homes and there’s one or two people living in them, there’s so much potential there to unlock.”
Battleaxe subdivision delivering housing variety
Mr Spasojevic’s current project is located on an 800 square metre block that includes the house he lives in, purchased in August last year in Thornlie, a 30-minute drive to Perth city or 45 minutes by public transport.
The subdivision is a battleaxe shape, which includes a long driveway access.
“A lot of houses are positioned to a certain side of a block, and quite forward to the street and I’d say a good 60 per cent of the properties that I’ve come across have at least three or four metres to one side, which allows me to have that access to the rear.
Mr Spasojevic says subdividing takes time, beginning with council consultations ensuring a property can be subdivided or to find out what it takes to comply, including conducting an initial geotechnical report, or soil sampling and confirmation of zoning.
“After the geotechnical report, you really want to speak to a good surveyor who can help you prepare the documentation required to submit to the planning authority in your region after looking at what can be done on the subdivision, but like mine, many properties are straightforward, with one block turning into two,” Mr Spasojevic said.
“I’m at the stage where I’ve just received conditional approval last week and I have a few conditions to meet before full approval, but I do have clearances needed to put the two blocks on two separate titles.
“Now I must decide am I selling the block or am I building on it, so I’ve had a number of consultations with different builders to just figure out what the best next step would be, but the goal right now is to have everything finalised in terms of the actual subdivision,” Mr Spasojevic said.
Infilling delivers investment profits
Selling half a block he owns naturally devalues both parts, but Mr Spasojevic says it’s a personal choice to not want to be mowing lawns and pulling out weeds and preferring to live in something smaller that’s easier to maintain.
“Also, this is what I want to do, so the whole subdivision process is something I enjoy and in terms of the value on the property it does decrease slightly, but the value of the block that you have created surpasses the loss you get from the existing dwelling; overall, you’re still better off financially.
“I’ve found other small subdivisions done by homeowners who might have been living in the property for a couple decades and then they realise the potential or the zoning in the area changes, as councils review their zoning every five or so years, and they unlock the potential.”
Mr Spasojevic was asked to share the value subdivision adds to his property but gracefully declined saying his purpose isn’t for the money, but to highlight the social benefits of his projects and share the message that any homeowner with a block that can be subdivided, has rooms to rent, can put in a granny flat or create co-living spaces, can also contribute to easing the housing crisis.
“Yes, there’s money to be made, but more importantly you’re creating a home for every lifestyle in every community, so what I’m trying to do is generate greater housing diversity, while also increasing urban infill.
“For example, where you’ve got people who have lived in a suburb for 30 years and they want, or need, to downsize, they want to stay in their community near friends and family, their doctor or community groups they belong too, and that’s completely understandable.
“What I’m doing and suggesting with infill developments, co-living spaces, renting out a room and granny flats is about creating those options.
“The solution is a mixture of those things that will bring that diversity and really provide for people’s needs, as opposed to the cookie cutter developments that are happening, 50 or 60 kilometres out of the city, where they’re big family homes, far away from everything.
“We have to move from that method and look into these new options that will create a better community as well,” Mr Spasojevic said.