hi everyone,
i have a good problem….i have 2 properties and 3 pieces of land valued at close to 1 mil. with only a loan of 330,000 i have good equity but am unsure what to do next?
(however with a 200 dollar gap between income and expenses)
do i sell the lot and buy a dream house, with no mortgage?
do i hang on, having eggs in different baskets?
do i buy more, with property prices at a premuim price at the moment?
do i wait for a correction in the market and purchase more if or when that happens??these are the questions i ask myself???
i would be greatful with any suggestions.thanks,
damonI would look at building on the land, if you can afford more debt, even temporary, build then sell or rent.
try this- block price 100k, house 120k, sell 280kTHe question is – can you develop any of the land yourself or can you go into partnership with a builder to develop the land. that would be one way to reduce the gap between income and expenses in the long run and maybe not have to share too much cost in the short term.
just a thought[
]cheers,
bluecatDo today what you want to do tomorrow
Vacant land is non income producing, I hope it is waterfront otherwise I would …
Sell the lot except one, buy a dream house with no morgage then use the equity in the second inv house to buy lots of positive income producing investment properties to pay for your dream boat [^]
I thought I was wrong once, but I was mistaken !
With only a $200 gap (I assume monthly, or is it weekly – ouch!), you should be able to borrow some money to either buy a cashflow positive place, or better still, build on one or two or three of your blocks of land, to increase the income. Of course, you’ll be borrowing more, but if your rental can cover all borrowing costs, plus that $200, you’ll be in front. Then you’ve got more breathing space to do more.
Cheers
MelHi Damon
I’m not prepared to say what you should do, for this is entirely up to you. However, at first glance, and based on how I think :
– land doesn’t earn income and therefore interest on any loans against it can’t be deducted (albeit depending on where it is it can earn incredible cap gain). Selling the land can fund other opportunities.
– do you need a $ 700,000-ish dream home ? what is a dream home ? . is it something that clever marketers want you to believe in ?
– diversity and positive cash flow are good
– what are your goals ? if you are wondering what to do, you may not be clear on where you want to go. (Reminds me of the old saying : ” even if you don’t know where you want to to go, you’ll end up somewhere anyway.”)
Don’t know if this helps, but good luck anyway.
Cheers, Jjt
Here’s my 2c…
You don’t mention your income but presumably the $200 shortfall isn’t too onerous. Your 3 pieces of land aren’t earning you anything but it doesn’t look like they are costing you much either. Beware selling them. They aren’t making any more land and land prices are what has fueled a lot of the property boom.Presumably you have set up your loans so that you can claim interest losses, etc against your income. Also presumably you are living in one property and renting the other?
Depending on your circumstances, I suggest building on all 3 pieces of land eventually or selling one piece of land to finance building on the others. Another poster has recommended going into a partnership with a builder but look at trying to do it yourself first. Why give away profit if you don’t have too?
If you can squeeze in multiple family dwellings on each piece of land e.g. a duplex, you can use the sale of one to completely finance the project. But only sell if you have to.
An extreme example I heard about is a block of land one house back from the beach in Cottesloe in Perth which was on the market in about 2000 for $800,000. I looked at in then and thought about dividing it and building but couldn’t contemplate the enormity of the loans. Since then someone bought the land, built 2 wonderful 2 storey houses with 180 degree ocean views, big decks. Sold one and lives in the other. I estimate each property is worth about 2.5M. Expect they would have got their house for free.
Anyway, a pretty nice dilemma to be in [
]Kim
Can you subdivide the land into more land? Even if you cant split one into two, if the three are together (not mentioned previously, and I assume they are not), you may be able to split three into four or five.
I would build the biggest house (2 story, so you still get a backyard) on the land, one by one, rent them out, and then see if you can afford to build the next one.
Of course, you could simply dissolve yourself of this massive problem of yours by giving all of your property to Mr Wrappack[^][^]
Hi Damon,
It sounds like you are in a great position, and isn’t it fun when you have to make a decision like that?
I would definitely keep the properties if they are working for you – high capital growth, or cashflow, etc.
I agree with some of the other responses, you should do something with the land. Either sell it, build on it and sell, or have you even thought about building your dream home on one of them?By the way, you should really think about what your dream home really means. Sometimes in life we think we want something and then we get it, we realise it wasn’t what we wanted at all…
And after all of that, buy some more properties… and diversify the locations and types if you aren’t at the moment.
Also, I wouldn’t worry too much about when to buy. When you are holding long term and buying good quality, it shouldn’t really matter.
I hope you enjoy deciding what to do.
Cheers,
Adihey,
why dont you invest in a property that produces some big cashflow, like $1000pw instead of $200 for example? some ideas: block of units, caravan park etc.don’t believe the lies, find your own truth
Agree wholeheartedly with the general consensus of doing something with the land, it may be experiencing Growth but your not getting any income from it.. it’s an Asset, use it as such..
Like wrappacks idea of turning more land into land, with easter just gone it made me thing of ‘turning water into wine’
Why did you initially purchase the land ??
You probally know what to do, and the comments here i see would re-enforce your thinking..
REDWING“Money is a currency, like electricity and it requires momentum to make it Effective”
Oh my God! Great position and you still question your own judgement?
The best thing to do is something. Sitting or cashing up for the dream house will not get you too much more in diversified capital gains(diff locations of property) and put all your eggs in a big basket.
If it were me, sell land with DA approved to the first developer who wants it.Please dont do the work yourself on the land. With that cash go again and again and again until your money, as deposits only, is depleted to about $50k. Then lets see what you have to make choices on in 6
months or a year.My wife and I have acquired 23 investment props in Qld Tassie and WA in 3 years.
Just go for it.
DD[buz2]Here is some advice from someone who was in a similar situation.Never sell anything until you have added the maximum value and you are disposing of it to an end user (i.e. a homemaker/investor). Alternatively add maximum value and rent it out. Have you ever thought of just why a developer would want to buy it off you?
You can forget positive cashflow when compared with development profits. The profit you can make from one development deal will enable you to buy a premium rental property for millions of dollars with a huge cashflow or better still continue developing.
What you need is advice from an excellent architect (considering cutting them in for say 5%…and watch them become very motivated and creative regarding development density!)
Then use an excellent construction lawyer to draft construction agreements (or if you lack confidence joint venture documentation) to be tendered to large bonded construction companies.
Any bank will jump on a well strucured high density scheme, especially with your equity and well respected professionals and builders on board.
This is your chance to enter the fast track.
Why pay an Architect 5% They usually charge 2.5% of cost to design an expensive impractical, hard to build residence etc. Selling the land is easier than going through the building process but not as rewarding.What you can build on the property will be determined by ist size, location, and local council regulations and zoneing. Check with council first. The duty town planer will help you and its free.
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