Hi Guys,
I am considering a drastic move. Have worked out some figures, can you see something wrong with them?
Background: Considering selling PPOR to buy smaller house with permit for rear 3 bedroom unit.
Sell PPor 380000
Less owing and costs (160000)
Balance 220000
Buy house with permit 300000
Get LOC for 80% = 240000
After paying 220k cash, costs out of savings, left with
160k to build unit
Owe 80k on LOC (Split LOC 80/160k)Should be able to build unit for less than 160K, and will be paying off 80k at a high rate of repayments.
However, worst case scenario is at the end owe $240k
Conservative value of both props on completion would be
$520K combined, so I’ll have 280k worth of equity.
Could sell one and wipe out all debt, or rent the new unit for probably a positive cashflow ( should rent for $250 week, plus depreciation)I’d appreciate any feedback,
Cheers,
Sue [
]“Be careful not to step on the flowers when you’re reaching for the stars”
Sounds like good numbers to me Sue.
Can you subdivide the land, and have separate title?
Cheers
MelThe only thing I can see that you don’t seem to be factoring in is the cost of selling your PPOR, you wont have a clear 220k to walk away with.
Cheers
Leigh K[]Carve your own path and lead the way …
‘Sell PPor 380000
Less owing and costs (160000)
Balance 220000′Leigh, I thought Sue covered that in the above?
Cheers
MelMel & Sue
Sorry my mistake I didn’t “and costs”[
]Cheers
Leigh K[]Carve your own path and lead the way …
Thanks mel & leigh for your replies,
I thought it sounded good too, but I thought I might be missing something.
Hubby came up with this direction, he’s a plumber so he’s pretty up with the building game, it seems a natural direction to go.
However, now he is “procrastinating”[8]
Will keep trying though,
Sue []“Be careful not to step on the flowers when you’re reaching for the stars”
I often find that the costs blow out.
Recent home renovations told me the truth.I have a friend who is a builder and told me that adding an additional room to my existing house would cost in excess of $60k. I chose not to.
On a block of land, and the desire for an architect home (to live in later) I approached two for “drawings”, one cost $1,000 and the other nearly $2,000. I havent even started yet! Now, both of these were told to work on three bedrooms, longe, dining and kitchen and bathroom. the block is pretty flat. I thought $200-$250k would be a reasonable price (land owned already) but this is the budget range.
My only warnings to you, factor in an additional 20% to cover incidentals. I didn’t pull them out of thin air, it was based on friends experiences of building.
Make sure council approves it, there are often hidden nasties be them council, costs, builders, weather etc…they can vary, they can change.Just make sure you have crossed the t’s and dotted the i’s before you do anything drastic. in Theory, everything works.
Elves.
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