Forum Replies Created
Thanks everyone for your comments. I think perhaps you are making things a lot more complicated than they need to be? My thoughts are to simply build a house to live in for maybe 12 months or so, then sell and repeat the process. I am simply looking at building up equity each time until we are debt free. For example, buy block of land for $300K and build new house for $300K retail value (as a builder the true cost might be around $250K). Sell for $650K. This leaves a profit of around $100K before selling costs. If I used a builder other than myself and paid retail value the profit would only be around $50K. Does this make sense?
This is where I am finding myself in some sort of dilemna. Can’t afford to keep the family home and buy another property to renovate, or build a new home. Have a reasonable amount of equity in the family home which will ideally be used as working capitol. My thought is to either build or renovate but live in that home until I sell for a profit. Then repeat the process, building equity as I go. Open to suggestions. My whole idea of gaining my builders licence is to be able to take a builders margin on any venture I undertake, hence building equity faster.
Terryw wrote:Do you have another job? Or can you provide 2 years financials?You may also want to get a LOC over the existing equity now. Then get 80% based on land value and just construct using the LOC – if enough.
Currently working full time in a job that will give me the flexibility to supervise the build. Plan is to keep working full time for a couple more years then consider building and investing as primary source of income.
Terryw wrote:You should really go and see a broker. Because if you own a company you will be considered self employed. If your company is contracting to build your house then they will probably see this as owner builder.Even if they do consider this to be an owner builder scenario, it should only affect the lending ratio. As we will have a significant amount of equity this shouldn’t really cause a problem. At least, that’s what I am led to believe.
Terryw wrote:Qualifying for finance may be an issue – you may be classed as an owner builder.Have a mate in finance who has advised that best strategy is to prepare a contract in company name to build for ourselves. The key point he has raised is to keep as much equity as possible to fund the build and use the banks money to purchase land using no more than 20% cash as deposit. He also advised that contract should be for retail value of the build because that is the figure the valuers will use for lending purposes. The difference in actual build cost and contract value can then be used as a down payment at settlement. Does this sound feasible?
Cintaku wrote:Ashley,If it is not too much to ask do you intend to sell to investors and stay to rent your own house after sell each time or you sell with intention to move to rent elsewhere? Or any of the two depending on circumstances of PPoR sell?
Hadn’t thought of the first option, but would consider it. I would have thought the second option would generate a potentially higher ROI, although I would have to factor in holding costs while waiting to sell. I guess that is why I have placed this post – to see what other investors have done and would recommend.
Cintaku wrote:Ashley,I forgot to also ask. What kind of builder are you? Timber/steel frame carpenter builder or concrete or other types of blocks builder?
Will probably stick with traditional lightweight construction – either timber or steel frame, and make sure the house suits the Qld climate, i.e. large alfresco area and open plan.
