Invest in Land Vs Housing

Hi,

If you buy land then you’re probably investing for capital gains as, other than adjistment, there is probably low or now income available.

As such, it’s critical that you manage your cashflow (budgets etc.) or else you risk having a giant cashflow leech attached to your hip pocket.

The key to any property capital gains focused asset is limited supply. For example, a vacant block in inner city holds more appeal than a vacant block in say Berwick. However, the price is adjusted accordingly.

A house will at least provide an income…

I guess my bias in this question is that when I was a kid my Dad owned a block of land in Narre Warren. Every two weeks he had to go out there to mow and cut back the blackberries.

When he sold he made a nominal amount of money, but nothing mindblowing.

Perhaps the leasson to learn here is that you need a plan first, and then let the strategy appropriate to achieving that plan dictate what property you buy.

Oh, and just a few more things:

1. Banks lend less for vacant land
2. You might want to consider a JV with a developer as part of an exit startegy
3. What is the likely COCR for the house?
4. What has been the trend for unimproved land values in the area where you are thinking of buying?
5. In both options, what is your worst case scenario exit startegy?

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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