Hi Hairpin thanks for question. I have never developed but my best mate and work partner has done a front and rear strata in Swan Street Yokine. Him and a builder bought a 930 sqm block and demolished house. They farted around for a year tossing up between building 3 or 2 houses. They decided on 2. When they finished them in mid 2012 they were valued at $100k each below break even, so they rented them and are waiting for prices to rise. I would not build a granny flat, in some cases they actually decrease the value of the site. The money is in the land so fixing up existing house might be a no gain exercise. The way the tax laws are applied on PPR makes a better option to sell to a developer. I have done this heaps of times but the problem for you and partner etc is you have to buy somewhere else. If you enjoy living where you are then some developers and builders offer deals to develop the site and you get a brand new house and they get the second one. Up to you I guess but play it right and you are on a good property that will be in demand. Hope this helps.
