Hi Everyone, I pretty new to real estate investing so i could really use your views. Basically i owe my own home, vauled at 250k, and i have 100k just sitting in my bank, but i have no income except a small pension due to a accident that has left me in a wheelchair and unable to work. So I want to move to a new town for new support, and try to invest there as well.
The new town has new houses for 400k-450k, but buying land 500-600m2 is only 130-150k, so i thinking i could build a house for 330-350k(+est15k interest), and get a rent return of $450-470p/w. Hopefully that should be enough to cover the payments and then i was just going to rent out my original house,(250p/w) to cover my rent payment when i find somewhere to stay.On the other hand someone told me i should build two 3b units, and then stay in one, and rent out the other, then put the rent from my original house into the loan. I'm not sure how much it costs to build units, but they are rented out for 350p/w and sell for about 310-320k each. Being new to this, building a house seem a huge leap and two units even bigger, i'm not even sure if 500m2 is enough to build the units. I am also concerned as i'm going to a town that is partly filled with miners, so as i don't have much income without any renters i could get into some trouble.
Sorry to dump this all on you guys but it's hard to find good property advice, so i appreciate all your feedback that you can give me.Thanks again,
PeterI am a great believer in small steps and minimum risk in the current situation. With little income (pension only) you will be exposing yourself to a major risk should the project not produce the expected returns. The downside risk is that you may well lose the lot and become bankrupt (if you are able to find a financier willing to back you).
Land prices that you indicate must be for a country town, so you would expect construction costs to be much higher than major towns/city locations. Land size is also a big factor, you would be hard pressed to find a regional council which would allow 3 units on less than 900 m2 (probably more).
Regional rents are very variable – often dependent upon seasonal workers unless there are major infrastructure/industries in the region.
Thanks for you reply scott, i know what you are saying, i really don't want to get a loan more than my assets, that way if the worse was to happen i could still have it covered. I really don't want to build as it's hard for me to get around to supervise and it's a huge hassle, but it's hard to get it out of my head when i see land so cheap and houses so expensive, but i know that can be a bad sign for the town's growth as well. The town i'm looking at has a population over 100'000 so hopefully the building cost shouldn't be too high, but buying a already built house is much safer. I keep going back and forwards, so i'll have to look in it more, if anyone else would like to put in their 2cents i would welcome it
Thanks Again,
Peter
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