- My wife and I plan to move into an area where the government is buying up spare land and making it into national parks. There is a block we have our eye on but our plans don't have us living there for 5-8 years.
Would you suggest buying a block now (I would need a loan, and I have no other investments), and by doing this I would avoid any future price rises/unavailability. Or would you not buy to avoid paying money (interest and rates etc) into a property that wont produce any income?
You're not buying an investment, you're buying a lifestyle or dream. So your issues are whether you are willing to pay the price ie payments on a loan etc and whether the property you buy will still be able to be used for your dream in 5-8 years. Check the property has a building right, keep an eye on proposed changes to zoning and object if they take away your building right. Find out from the government department what their plans are. If they are buying up in the area there must be some kind of document saying what they are buying and how much they intend to buy.
If I bought I'd probably look at getting a DA approved sooner rather than later first to reduce the risk of zoning changes and second so if there was a resumption by the gov't dep't I couild argue there was a higher value.
I would prepare a forecast of how much the land would have cost you at the end of 5 years if you buy now. This forecast would include interest and rates paid, etc. And compare it to what you think the land value will be in 5 years time. If the land value would be higher in 5 years time you can't go wrong. Even if you decide not to live there you can just sell the land for a profit. But of course you should consider all the possible factors that will affect the land's value.
If it unique or spectacular in some way like ocean front or water views I would go for it BUT … put a shed on it and get some rental coming in … don't do what I did – by 5 acres in the whitsundays and no income for 20 years really really stupid !
D
You really just have to weigh up the options and look at things mathematically – if you pump money into something else, what will be the potential financial reward over the same period of time, and will it be superior to owning the block of land? If it is, then you're better off doing something else, then using the proceeds from that to buy the dream house – then you'll have less debt, or maybe own it outright.
On the flip side, if it works out that you'll be financially better off in the future because you expect the property to significaly increase in value over that period of time, then you have your answer.On top of all of that is the emotional aspect – sometimes, you just can't live without something, regardless of the financial reality, so sometimes, that can override the whole thing. Time to open up an excel spreadsheet!
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