Hi All,
My partner and I are currently looking at a House and Land package ( 4 bedder/2 bath etc) around the Newcastle area (L-$185K, H-$230k), however we are not sure whether this is a better option Vs purchasing an already established property.
Is this risky considering its out first investment? Just wanted to know peoples thoughts on which direction we should take.
Look forward to your feedback.
Tiffmad
One thing to keep in mind, is that if you have a house that is already built there can be no 'cost blow outs' or time frame for completion blowouts whereas when building there can be 'unexpected' costs. You may also need to pay for landscaping, fences etc if these are not included in the building quote. Also with an existing house you can see the quality of the finishes, how many powerpoints there are etc. YOu may also be buying in an area where the building work is finished as opposed to a new subdivision where houses are stil being built around you, noise, may end up with a two story hosue looking into your backyard etc.
The pros of having a hosue built is that you may have more input into the location and number of power points, aerials etc, (although there will be added costs for each change or addition) you can choose the design that most suits you and if an IP can claim depreciation costs from the date of occupation, good for tax returns.
I guess it comes down to your own needs or wants.
Sonya
There are advantages to building yourself. The biggest advantage in a house and land package is the promise of instant equity. Hopefully after paying $185k for the land and $230k for the house your property would then be worth more than $415k and you would have some equity.
If you buy an established house you can collect rent straight away. If it takes you 12 months to build your house that is 12 months without any cash coming in…which means you will be completely paying for the mortgage repayments and any other cost. Just make sure you can afford this.
I see so many people stretching themselves to invest, and being so out of pocket that they can’t afford to live. I understand the principle of saving now and living frugally so you can enjoy life in the future, but I think some people take it to the extreme. Be extremely careful with your cash flow. The last thing you want is to hate your life because you have to work 80 hours per week just to pay for your investment.
Another good thing about house and land packages is that you can claim a fair bit of depreciation on your property once it is build because everything is new…and you can get an extra $7k from the government for the new build FHOG
Ryan McLean | On Property
http://onproperty.com.au
Email MeHi tiffmad.
A lot of sound advice has already been offered I see.
I am not knowledgeable about that particular area, but for me it would depend on what else is available. If you can get something: already up/in a better location/under five years old/on a subdividable block, for that price AND the possibility of finding someone willing to negotiate to give you an even better buy, I would be doing that. That said, we have built 3 things recently, and when the market is rising, you end up with a better property than you could have bought for the same money, providing you do some work yourself. On the down side, we spend a lot of spare time finishing them off!!Another caution, we found the bank (previously very forthcoming) not wanting to lend to us again while the most recent house was being built. This could mean you miss out on a bargain while your investment is under construction, which will be about 12 months I've found.
Good luck,
G
You must be logged in to reply to this topic. If you don't have an account, you can register here.
