Hi everyone
Its been a while since i have posted anything and since than my situation has slightly changed for the better.
Currently my mum and i own our house with around $150 000 equity and we are in the process of purchasing a block of land where we will have around $50 000 equity. We plan to build on it in the next six to twelve months, than sell and split the profits or rent it out depending on our situation at the time.
At this point in time i would like to buy some rental properties on my own, as well as with mum so that when she retires (10 – 15 years from now) she has a nice nest egg. i’m 22 and on $33 000 per year with no debts and only recently have started saving.
I’m not sure whether to build or just keep buying properties or whether the bank will lend us any more money.Any ideas of what i could do in this situation would be appreciated. i would like to own around six properties by the time i am 25.
Thanksk.radzki
Hi Kasia
Wouldn’t you be better off purchasing a property with a building on it to generate some income? Any kind of building such as a house or something that you can rent out is usually the way to go so that some income can be made to help you pay it off or pay the bank to keep it. This is sooo much better from an investors viewpoint. My experience of buying blocks of land is that you don’t get any tax benefits from money spent on purchasing and developing and the property will most likely be negatively geared, which is another story.
Arny
Kasia
Good advice from Arny. Building can be expensive and often more so than you think. It’s not only the house, but the landscaping, carpets, fittings etc that start to rack up the $$$$ and, all the while, you have no income.
As well, not all buildings are worth more than what you paid (land+Bldg cost) when complete so you will more than likely have significant negative cashflow.
Make sure you do the numbers right before you go ahead and, if it all stacks up, go for it. Otherwise, it might be a better idea to look for property that will produce income from day 1 at this stage.
Hope this help.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Thank you for your feedback Megan and Arny.
The reason we are purchasing the block of land is that we have around $50 000 equity, we signed the contracts two years ago and have been awaiting council registration. The other reason is that we lose our $8000 deposit if we dont make the purchase. The land is only 200m from the beach, an hour and a half south of Cairns so I figure thats also a bonus.
The thing now i am not sure about is whether to wait till we finish building before i make my next purchase or go ahead and start purchasing positive cash flow properties immediately.
i dont want to waste any more time procrastinating.k.radzki
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