I know this is not the ideal model for investment however, as I am in the Building game, I am thinking of giving it a go…..
Hoping to buy block for around $250,000 with ocean views, build a house on it for around $350,000. (Will need to be pretty flash to meet strict development guidelines for the area).
Although I will be paying off the block of land and not getting any return on the purchase price of the block or the house when I build it, I conservatively estimate that I will sell the property for around $200,000 more than the cost of purchasing the land and price of building. This estimate does not take into account loan repayments for the block or building loans.
Although risky, has any one done this and suceeded ? What are the possible tax implications ? Am I dreaming that this is a good way to make a profit ?
Only young so if going to take a risk, may aswell now………???
What is stopping you currently from building now and renting out until prepared to sell?
Still paying off mortgage and got commercial property on I.O (Positive geared). No funds after buying block to build now as used up equity in home. Need to save to build and hope by time I build block and my house I live in will increase and will have more equity + savings. Other option is to sell my house but it is in a booming area and has alredy doubled in 3.5 years, hence dont really want to sell it, espescially as I built it. Plan to move into the house I build for a year to avoid capital gains when built. ??
Hi Birdy,
You sound just like me;) I’m in exactly the same situation. I have done some calculations and I too see this to be very profitable – but yes the only thing that will affect your profits is Capital gains etc.
I’m currently looking into setting up a trust etc to help decrease the CGT I pay.
Where are you thinking of building?
Where are you from?
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Im from Perth and looking at purchasing in the Northern corridor on the coast, literally a 30 second walk to waters edge. As properties directly next door are selling for half a million, I dont want to miss out on this gem yet cant build for a year or two. Main concern is paying off the Block which in turn is reducing my payments on my mortgage.
The other thing I am taking in to account is worst case scenario. If I was to sell block further down the track would need to sell for around $23000 more than purchase price to cover $15000 fees /set up costs and approx $8000 agents fees (I think)! to sell. Not even taking into account loan repayments.
As for CGT I will move in for 12 months (if not longer) then if i decide to sell there is no CGT as it is principal place of residence. Then can move back to my other house. Other wise you pay CGT on half your profit and the other half of the profit goes on to your taxable income. (I am not accountant but think thats how it works ?!)
Be interested to hear about your proposal and where you are from or anyone else who has done similar.
Thanks for your time…Decisions…Decisions…
Interesting…I’m from Perth aswell, and my block is located 30 secs away from the beach:) Where about’s is your block?
I actually think there is alot of money to be made this way, aslong as you pick the right areas. One of the key factors is to make sure the land choose is quite unique and has good potential for capital growth.
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)By the sound of it we may be neighbours ! The land is definately unique and capital growth has been very good in area. As for where it is, lets just say its about 35minutes north of perth. And yours ?
hehe – i’m guessing it’s somewhere between two rocks and mindarie??
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)You should make sure there is no covenant on the locations that require you to build within certain times (for example 2 years). Usually though this is only in relation to certain developements such as those controlled by Delfin.
Wayne you got it in one ! As for covenants, they have all just been lifted which is a bonus. The main downfall appears to be that if I want to sell, I cant put up a For Sale Sign on site. Are you going to give it a go ?
I think you two need to get together for a beer or a coffee and swap notes.
This is quite a normal way for people to make money in real estate. I am considering a project myself at the moment.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Can you purchase on option on the land? Eg pay $xxxx for the option to buy the land in 12 months at a set amount. This will free up your finances but you will still have control over the land. I guess you will need to seek advice from a solicitor on this and negotiate an option fee with the seller.
I am trying to work a deal using an option at the moment – have never done it before but only one way to learn ie give it a go.
Hi birdy,
Yeah, I’m going to build on it eventually – though not for a couple of years. Once the marmion extension is up there I think it will atract much more return!
let me know how you go!
Cheers
Wayne
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