is land a good investment to build deposit?

Viewing 3 posts - 1 through 3 (of 3 total)

sand
Member
@sand
Join Date: 2006
Post Count: 7
May 2, 2006 - 9:37 am
Hi
I’m new to all of this. My husband and I just don’t have enough deposit for a house yet, so we were thinking of maybe buying a bit of land somewhere to start with and sitting on it for a while. Would this be a good idea? What should we look for ? Should we buy via the internet and some of the places are too far for us to look at. Any other advice would be very helpful please.
Sand[blink]
Kiwi-Fulla
Member
@kiwi-fulla
Join Date: 2002
Post Count: 371
May 2, 2006 - 1:04 pm
Hey There,
This is a somewhat risky endeavour as it is a bit like gambling… however you can mitigate (reduce) your risk by investing in one of RP datas top 100 suburbs…. I was looking at some land in NZ and looked at the current asking price to the price 18 months ago and they have made over 600% on thier original cash outlay.
Some land depends on zoning changes to make them… which may or may not happen…….
The risk is high and sometimes the return is high also …
You need to consider if what you intend to do is take you to or from your goals?!
If hte answer is the later… then reconsider your approach and look an another option or an area that you can afford to start in perhaps.
Cheers
Kiwi
Derek
Member
@derek
Join Date: 2004
Post Count: 3,544
May 2, 2006 - 2:02 pm
Hi Sand,
I am not a broker but as I understand it land is seen to be more of a risk than standard residential real estate and as such banks will not lend at as high LVRs.
You will also need to consider that for a normal run of the mill block of land there is no deductibility of interest so you will be holding this ‘asset’ entirely from your own pocket.
My advice is that you should see an independent mortgage broker (and not a bank) and see what you can do as the situation currently stands. You may be surprised.
A broker is a better avenue for this exercise than a bank as brokers have much greater felxibility than the banks who are usually hamstrung by their policies.
To give you an example I have seen the results of a brokers number crunching. WIth the same inputs the lending results varied from $191K up to $691K
If you cannot borrow then you will be able to develop a strategy that will enable you to do so. A bit of planning and head down tali up effort may be in order.
Derek
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http://www.pis.theinvestorsclub.com.au
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Skype – derekjones2113