I would appreciate some opinions please.
I own my house approx 800m2 block,which is a 6 minutes walk to the local railway station at Pendle Hill NSW, value approx 420k to 440k.My neighbour is selling (retiring) in 6 months, he has bought land elsewhere and is currently building so the move is definate for them, their value should be the same 420 – 440k i would suggest, and their block is similar in size.the property also has a nice size council approved granney flat that would rent, as well as the 3 bedroom home could be rented out, both house & flat should bring in a min of $400.00 per week in rent.
My daughter is almost ready to buy but lacks a full 20% deposit of 440k ($88k) she has about 40k at this stage, she was told she can buy something up to about 320k in total based on her deposit & salary.
My wife and I are willing to help her with the remaining deposit shortfall, and also assist with future shortfall for the loan repayments (if any) after rent recieved of $1600 per month & her contribution of $1400 per month.
So my questions are.
1. Does this sound like a good investment opportunity for my daughter, or even my daughter my wife & I as both properies will be side by side and be 1600m2 and 6 mins from the railway statioin and may be able to be developed,town houses, villas,etc by a developer (not by me/us.2. Can the property (title deeds) be bought in my daughter name fully,but the payments be the joint responsibilities of my daughter my wife and I.
3. Where can i go in this area to find out if this type of property 1600m2 would suit a developer.
Thanks in advance for your replies as they will truly be appreciated.
Many Thanks
Trustie
Hi Trustie,
Just a few thoughts.
What is the zoning of the blocks? You can find this out from council who will also be able to advise the density level (ie how many per area). This will help evaluate the development potential. Have a look at what is currently being developed in your area, what sale prices the end dwelling are getting, what prices current listings with "development" tag lines are on offer for. Dont be afraid of ringing up your local REA and asking their opinion of what is available (hey you can always say you are looking for development potentials!). If it points to there being a valid development opportunity in combining the two blocks you may be well placed to take advantage of the neighbour selling. Of course, consideration must be given to the ability to rent the property out in the meantime. If your daughter has the surplus funds and is secure with the thought of capital gain, great, if it is going to be a struggle then the possible future gain may not be worth the pain.
It certainly sounds well worth investigating further and I hope it all goes well for you all.
Kind Regards
Tammytammy wrote:Hi Trustie,
Just a few thoughts.
What is the zoning of the blocks? You can find this out from council who will also be able to advise the density level (ie how many per area). This will help evaluate the development potential. Have a look at what is currently being developed in your area, what sale prices the end dwelling are getting, what prices current listings with "development" tag lines are on offer for. Dont be afraid of ringing up your local REA and asking their opinion of what is available (hey you can always say you are looking for development potentials!). If it points to there being a valid development opportunity in combining the two blocks you may be well placed to take advantage of the neighbour selling. Of course, consideration must be given to the ability to rent the property out in the meantime. If your daughter has the surplus funds and is secure with the thought of capital gain, great, if it is going to be a struggle then the possible future gain may not be worth the pain.
It certainly sounds well worth investigating further and I hope it all goes well for you all.
Kind Regards
TammyThanks Tammie
Your reply was welcomed very much, I will speak to my council and find out the zoning, at the moment around me exists mostly town houses,villas,duplex type buildings.
If the place is rented my daughter will be fine with some debt if it means some gains down the track.
It is very difficult to get into the market if you are young even though she is a saver.Thanks again Trustie
Hi Trustie,
I am answering this from my own perspective using details you provided. Hope this provides you with a different perspective to view your situation.
1. Without considering any factors like love / trust to my kids, etc. I am reluctant to go into any dealings that, if fails, would severely impact my survival in retirement. There's plenty of horrible stories where the deal fails and the parent ends up homeless as the bank moves in on the family home.
If I do decide to go ahead with hleping my kids, I'll view it as objectively as possible, complete with sound exit strategies and have the lawyer drafts it properly. For example, I'll insist of having my + spouse name on the title deeds as well
2. Determine the financial pain that I have to go through. Do a detailed financial calculations using worst case scenario and most likely scenario for the first year and repeat these for at least a further 2 years. If the worst case scenario looks manageable then go ahead.
3. I would not decide anything just based on the potential gain. To me, the worst case scenario for the early years is much more crucial. If I can stomach this the potential gain I dream of is much more likely to materialise.
Good luck and all the best,
CattleyaCattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
hi Trustie
Sounds like a good deal to me. If your daughter can pick it up for market value, the combined value of your properties should be higher because of the development potential. Even if you do nothing for years to come it is possibly better than buying 2 separate properties..
What you could do to help your daughter is to lend her the money over what she can borrow. But get contracts etc drawn up properly for tax reasons and legal reasons (you could have a falling out, and/or one of you could get into trouble with others).
If you are contemplating developing in the future, it may be wise to speak to an expert accountant to work out whose name the new one should be purchased it – yours, daughter's combination or trust etc.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for the replies folks, I read them with great interest.
If land is the thing that appreciates over time and my daughter can get a fair return from this next door property with its granney flat as well , it seems to me buying it will be a good investment as each block will gain off each other because they have a bigger land area 1600m2 that can be developed later, if this is not always the case can someone please let me know.
Interest rates rising constantly has to be a big concern though, I know rent can rise to a point but putting the rent up often if rates keep going up will obviously be difficult as tennants only have so much deposible funds as well to use.
How could i find out if this area has actually gone up or gone down in value over the last 1,2 or 3 years.
PS all posts welcome both positive & negative as it helps me paint a better picture of things.
Thanks Again
TrustieHi Trustie,
you can look to magazines like Australian Property Investor (at newsagents) for the growth in the area. Also, most REAs would be obliging enough to give you the info as they have it redily available. Alternatively, you can pay for an individual search with RP Data or Red Squre or join for the one week free trial at with PDSLive to get the info.
Hope that helps and souns like you have a win win situation if all goes well.
Cheers
TammyHi, according to Domain.com Pendle Hill is expecting 7% growth. The rents you quoted sound low for a place so close to Parramatta. Sounds like they should be considerably higher. My folks have a granny flat in their yard not far from your house and it pulls $200/wk. Nice earner for them…. Sounds like a goer.
Thank you Tammy & Lalibella & previous posters.
It was good to know that Pendle Hill may get a 7% grothe rate in this upcoming year, i was a bit concerned about the grothe because of the recent/predicted slump in house prices in Blactown which is a nearby suburb , and some other outer Sydney suburbs are also tipped to struggle, I said rent of $400.00 per week because i wanted to be conservative i suppose to allow for any surprises.
Can i have some feedback please.
If my daughter buys the next door property in her name fully (so she can get the first home owners grant) but the loan $360k is in my wife & my daughters name as they both work) can all the interest paid by them on this loan be tax deductable or negatively geared seeing that the my daughters name only will be on the title deeds, but both names will be on the loan documents.Thanks again everyone.
It sounds like a good plan to me. As you're not planning on selling dev't site in a hurry, I'd also see if your council and planning commission has long term plans to make the density even higher. i have a similar sized block in Perth which you can currently put 3 houses on. The town planner at council says in a couple of years they would like to change zoning so I can put 8-12 townhouses on it. If you do some googling you may be able to pick up some further information also, eg view minutes from council meetings, approved developments, zoning changes etc There may also be other documents similar to this for Melbourne.
http://www.bassendean.wa.gov.au/publications%5CVision.2030.Community.Plan.pdf
http://www.bassendean.wa.gov.au/publications.htm Then click on vision 2030
Good luck.Thanks Millions for that Information and i will certainly follow up the links you sent.
Being only a few minutes to existing railway,buses,and freeways and Parramatta city & Westmead Hospital makes me think that as time goes by, the more land means possibly more accomodation will be needed for this area ,and i suppose the fact that a neighbour is selling (been there for 33years) I should try and not lose an opportunity if its there to be had,but of course I need to do my homework hence why i am on this site,as i am aware of the knowledge that i can learn just by asking the right people/forum
Many Thanks
TrustieGidday,
You can get all the information on av. prices , rents and other info, for each suburb from the Valuer Generals office…usually costs a small fee. Check with your council what the area is zoned for (density level) & if there are any potential changes in the future to the zoning density…dont want to put you off, but in an area not far from where I am doing a 3 unit dev. the council is changing a current duplex zoned area back to single dwellings!!
Usually, the best way to see whats happening in an area is to take a drive around & see if anyone is building units…if not, Id be wary and see the council first!!…best of luck, Andy
Hi trustieone
I might be interested in purchasing your property if its still available.
Contact me if you rinterested in selling
Thanks
Robert
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