What is better/cheaper and if cheaper how much more cheaper. If i search for a peace of land Obtain a construction loan allocate builders/brick layers etc. Once its all built Sell it, and pay off the bank and keep the profit for the next investment.
Am i missing something here?
Whats the ups and downs I dont care about the running around headaches and bla bla if its goin to make me 60k profit in the end its worth it for 1 month worth of running around.Isnt it?
Or is it cheaper to go to Masterton homes or something and buy a house and land package, Do they sell it cheaper then you can build it because they are a huge corporation that buy in bulk?
I'm also interested to hear opinions on this. We are looking at building vs buying as the homes in the area we are looking at are a large amount above what we could get one completed for, even taking into consideration 6months of interest while house built.
It depends upon your intentions – are you buying to resell once built or buy & hold? A project home will be much cheaper than a one off design, more streamlined process thru council & building phase.
As for a land/house package vs land/project home – this is purely up to you. If you are happy with the location of l/h packages available fine, otherwise buying land in the more desirable area could be to your advantage.
Yeh buying and selling straight away for some cash flow
Buying and selling will trigger capital gains and you may also be up for GST because it is obvious you are in it for a quick tranaction. This will probably wipe out any profits you were intending on making. Speculating in property is a risky business – but can be done if done properly and if you intend being in this game for the long term. Property is supposed to be a long term investment, which will level out the costs assicated with buying and selling. It is very difficult to make a quick buck in property. Let time make the money for you, hold and sell only when absolutely necessary. If you want a quick buck then I would suggest you look towards shares or something else.
Also, if you are serious about making money in property then I would suggest you read a lot more. There are merrits to buying project homes, but also downfalls. "You get what you pay" for is a very true saying. If you buy a cheap project home (based on price only) then you will pay for it in the long run. It most likely will require very expensive maintenance in the short term to fix up what has been hidden from you. If you get it custom built it may be very expensive because it is a "one off". You have to decide what is a happy medium and be prepared to be in it for the long term. The golden rule to property investing is "Never, Ever, Never sell"
I hope this helps.
hello everyone !
as i overview this thread , i find it interesting ( the title itself caught my attention ..) because of this , i want to share a link that can help you decide whether to buy or construct a house .. pro's and con's in buying or constructing a house can be read here …Thumbs up for project homes!
I’ve done few development and always used project homes. They ended up more feasible and easier process. My developments are all interstate – I obviously can not afford going here to oversee every small thing. Plans are usually very practical, market driven and you can always change façade (some project builders don’t even show you elevations, as they are custom made) – you really can do a lot with it.
Initial paperwork always was messy for me (may be it’s just my luck). But once you are over it – a construction is a nice, easy & stress-free process. In fact you don’t have to do much at all, just occasional inspections.
After builders finished I’m managing project myself to finish the project – just staff that builder does not do or for what they would charge too much (aircon, venetians, flooring, shower screens, light fittings, dishwasher, concreting, fences, landscape, pawing, pool/spa, etc). It’s a bit of a hustle, but all very common sense. Nothing a normal person can’t handle.
New home buyers do not want a used house when only new will do. They do not want to inherit somebody else's worn carpeting, personal taste in kitchen appliances or look at some kid's initials scrawled into once-wet cement that they did not put there. The home must be brand spankin new, fresh and clean without so much as a finger print on the walls.AndrewH wrote:What is better/cheaper and if cheaper how much more cheaper. If i search for a peace of land Obtain a construction loan allocate builders/brick layers etc. Once its all built Sell it, and pay off the bank and keep the profit for the next investment.Am i missing something here?
Whats the ups and downs I dont care about the running around headaches and bla bla if its goin to make me 60k profit in the end its worth it for 1 month worth of running around.Isnt it?
Or is it cheaper to go to Masterton homes or something and buy a house and land package, Do they sell it cheaper then you can build it because they are a huge corporation that buy in bulk?
We did the development on 1 of our properties last year.
Overall it is cheaper at the cost of running around as you have put it.However, running around is a gross understatement, and it can be for way more than a month.
– Getting the loan approved took almost a month of running around with useless paperwork.
– The Builder and tradies were a nightmare to work with. I don’t mind running around, I don’t mind having meetings. Its the never showing up, variations AFTER they have done half the job, and not coming back to finish it & generally all the lies on deadline that I have a gripe with.
– All in all the project was 6 months overdue (which costs you a small fortune when paying the mortgage on something you cannot use)
– The finished product was not worthy of sale, so there were a bunch of additional costs post handover.
– The sheer personal mental drain of feeling like the project will never end, whilst your bleeding money with monthly payments was the worst part of the whole game.(By the way this was a completely custom designed home because of the sloping block disallowed for pre-designed homes)
The original plan wuz to build it and sell it just as you are planning now.
At the end of the build, when costs were tallied up + CGT applicable to the quick sale.
It was profitably better to live it in as a PPOR and then sell it for CGT exemption.
On the flip side of that. We bought an Off the Plan Townhouse from another developer.
All was done wonderfully. No Budget concerns. On Time delivery.
The hardest part of that was inspecting the progress periodically and choosing colours for stuff.
End math. Both builds worked out roughly similiarly in costs. One without the emotional stress and uncertainty.If your lucky enough to pick a builder & trades that have integrity. Then most of the journey should be smooth.
Unfortunately many are not like this. Protection comes in the form of legal contracts, with dates and consequences.
If you are aiming to turn a profit. You will naturally err on the side of cheaper partners for the build as we did. This will expand the pool of poor suppliers incrementally and increase the headache associated to it.Don’t even get me started on needing to often pay for the mistakes they make. Thats just the icing on the cake.
Once upon a time, I also thought the developing process would be dog easy. Older and wiser now. So not the case.
Hi AndrewH,
Remember that your depreciation is also 25% or so less on a construction.
kind regards
George
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