Hi Everyone,
Just wondering what you think would be the smartest thing to do in my position. I’m 25, Income will be say $50-60 g’s (finish uni this year) currently do not own any houses but want to get
my foot in the door with the 1acre my father just gave me which is in Humpty Doo (about 30kms from Darwin city).The property is in my dad;s name- However i am still eligible for the $21000 to build on the property because of some “loop hole”- or do you think it would be wiser anyway to put the property in my name?
I know a builder in darwin who can knock up a basic 2-3bedroom place for me at about $20-$30 thousand, Nothing flash but i thought maybe put two of these on the property and rent them out? They would be similar to portable home type constructions etc.
Or get a decent kit home for about $60,000 and get that put together by myself and a builder-probably pushing it to about $80-$100 thousand.
The only reason i am thinking not to go all out and put a decent house on it is because if it all fails, I can live with losing $20-80 grand and still having the property, instead of having the bank repossess my house and the land.
So what would you do in my situation if you didnt have much money to work with.
Any advice greatly appreciated for us noobies.
CheersJoe and Chels
What is the rental market like in Humpty Doo? (great names you Ozzies have for your towns btw!!!!)
What is your target audience for these flats? students? elderly? single mums? families?
It's a simple numbers game, how much rent will you get for the knock-up 2-3 beder vs. the nice kit home?
What ype of properties are in demand in Humpty Doo?
Is there a shortage of 3-beders? 2-beders? 1-beders?
An acre is a lot of land, should you be building a block of flats? You could plan for three blocks of two flats joined together with garages or carports and build them over time, i.e. get one block up and running, then build the next, and the next.
If you want to leverage (take a loan) on the land, then it would probably be best in your trust's name. Check that with a good accountant and lawyer first.
All the best with your adventure.
Vicky
Thanks Playa,
Well for the knocked up little house i’ll probbaly get something like $200 a week rent on 1 acre of land. I thought that would probably be the best idea and put it in the corner of the block till i get enough money to put a kit on the house than use the existing little place as a granny flat.
The only concern is its a family block and if i took out a big mortgage and things went out of control (i.e economic crisis) i dont want to lose it all in a reposession. At the same time, I understand to get anywhere is this game you need to be willing to take risks right.
Anyone have any ideas what to do.
Thanks
BTW i didnt really have any target audience in mind, Whoever can afford the rent i was thinking. Should i have a target audience?
Ta
joe
Gosh, it's been a long time since I was last in Humpty Doo. It used to be all acreage housing sites, though. You need to look into the zoning and what you are allowed to build there, before spending too much time costing out various projects. Not sure what it's like there now, but a block of flats would have been decidedly out of place there ten years ago. Check your zoning.
Joe,
I'm thinking a target audience would be good, esp. if you are going to have more than say 2 flats in the complex, i.e. you wouldn't want little old ladies mixing with gang members or families with kids yahoo-ing all day. I've found it's very important to get the people-mix right if you've got more than a couple of flats close by.
As for owning, I'd find a top notch lawyer and accountant that you trust implicitly with your life and and that you're going to have an ongoing business relationship with for years to come. Have the land and buildings in a trust NOT owned by yourself, but which you are the beneficiary of only and make the lawyer/accountant the trustees with signing authority.
As your father has "given" you the land, if I was you I'd take control of it. It might be all love-and-cuddles now, but watch out if something goes wrong or not as dad would have liked!!! I reckon that if it's yours, you need to officially make it yours.
Sounds like you've got lots of research to do Joe.
Cheers,
VickySHales
Yeah its still all acreage housing in humpty doo, but i think times will be starting to change soon. There are a lot of places on 2.5acres or a few little places all sharing a block. I will definatley have to check the zoning before making a decision ill get onto that very soon.
ThanksPlaya
Yeah im starting to think the best decision is probably put it in my name or a trust, Ill look into how that works. My old man wants to have it in my name. Its me who doesnt want to lose it, because i have a connection to it growing up on it and stuff. But thats where the risk comes into it, we all need to take a risk here and there right>?
My target audience i would have to say would be either a couple or single mums with kids- These kind of people i think may find it hard to find a place to rent but Ill have to do a lot of research. Where do i start?Thanks Vicky
Twice you have asked about needing to take a risk. The answer is, yes, any investment has risk. But, there is alot you can do to mitigate the risk. Lots of research, planning, research and more research. Property investment is about making very well informed decisions, to minimise risk. Afterall, the figures you are gambling with are pretty big. So don't just accept risk as a part of the job, Your job is to minimise the risk by becoming very very well informed. It is a slow process.
Joe, be very very careful putting any property in your own personal name. If you are ever sued for anything, your property will be the first thing the other side's lawyer is eyeing up!! Best it NOT be in your personal name, because you just never know what is likely to happen in the future. That is why trusts were set up, to protect people's property!! Yes, life is a risk, but why take risks when there are other better options? I'm getting more and more risk adverse the older I get and the more stuff I accumulate.
In NZ, we have the "Department of Building and Housing" where you can go and find out what type of properties are renting in your area and for how much. Another place you could try is all the local rental management companies – ask them what type of houses they're renting, what the demand is like, how much they're getting, etc. That should give you a picture of what is in demand and what is needed. No point building a 2-bedroom flat if there are 50 vacant 2-bedroom flats in town, right? But if there is a shortage / demand for a specific type of housing, that's what I'd focus on.
Keep up the good work.
VickyThanks for the help guys, Can’t wait to put my foot in the real estate door, looks like I have a lot of research to do but definatley worth the while.
Cheers
Joe
Well basically just had my dreams crushed. Shire says im allowed to only have a single dwelling on it, And the minimum size block is 5Acreas.
My 1 acre is attatched to another 9acreas which belong to my old man and siblings.On the council rules it says despite clause 11.1 (Stating lot size minumum of 5acreas) zone RL(rural living) may be -with consent- subdivided as a ESTATE DEVELOPMENT.
What is an estate development?
It also looks like i cant even rent out a house if i put it on my 1acrea, doesn’t sound right to me.
Does anyone know anything in detail regarding Darwin zoning- In particular RL zone.
ThanksBest thing you can do is go and sit down with the local planning department and ask them these questions. They are the people who will be making the decisions about what you can and can't build on the land, so best find out from them. Ask them what an "estate development' is.
I would be horrified if councils are saying you can't rent a house! Who lives in the property after the house is built and whether you collect money from someone for the privilege really is none of their business.
So, a trip to the Humpty Doo council is what you need to do. Go armed with as many questions as you can think of and get this resolved "from the horses mouth".
Good researching,
Vicky
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