Ok so im new to all this, i dont probably know what im talking about but hey you have to start somewhere.
my parents want me to invest in my first house/unit and rent it out.
i recently saw a printout in the newspaper of all the postcodes around adelaide which showed the average house price and the predicted agverage price in 5 & 10 yrs.
i have always dreamed of living in the hills, i noticed that the average house price in crafers/stirling was 600-700ish and is predicted to reach up to 2million in 10yrs.
now i have seen land in crafers for around the 350-370 mark.
so the idea that has come to my mind is maybe im better off buying the land to secure something in an area i want to live in because if i spend the next 10yrs investing in unit/house the profit made vs the increase in the crafers/stirling location may just not be enough to cover that increase and therefore put it out of my reach forever.
i dont earn alot of money but i want to be able to live in an area that im happy with.
hopefully this makes sense.
cheers.
I see your point. Question is, if you borrow to buy land, there's no income whatsoever. Can you stomach the repayments on that loan over the next 10 years on the basis of numbers that you saw in the newspaper? If indeed the valuation is accurate then that would be awesome, but what if its not?
Also, if you buy an average $400-500K house today and another in a couple of years (and don't buy anymore for the remaining 8 years after that), you would probably have assets amounting to $2 million in 10 years time anyway, assuming the trend of doubling every 7.2 years continues. Plus you have income.
I've never bought land before, so hopefully others will have input on that.
No income
I've never bought land on its own either.
I have a friend who has purchased a block of land in a hilly area and he has done nicely from capital gain but he couldn't use negative gearing and he really struggled to pay back his debt.
There is the counter argument that there is no repairs, insurance and tenants to deal with.If you could get someone to put some animals on it for agistment you may be able to earn an income on it.
duckster wrote:If you could get someone to put some animals on it for agistment you may be able to earn an income on it.That's a good idea actually, never thought of that. Plus, that would mean fertile soils and good grasses rather than weeds on that land come time to actually build. And you wouldn't need to worry about mowing the lawn or people dumping junk on your land. I heard that some time ago, at least in Singapore, it was possible to take possession of a plot of land (without cost, except legal fees) if you dumped your junk (or any other property) there and left it long enough and the actual owner didn't respond to it.
I see your point, ive already thought of the no income part but i guess what im looking at is the capital gains, and if i take the investing in rentals path will i end up with enough assets to buy in that area 10yrs down the track.
My other dilema is the fact i dont want to live at home for another 10yrs!i understand that going by the paper isnt always accurate but i have friends who live in the hills and crafers is actually the closest hills suburb to the city (only 12kms) therefore its become a highly desirable location, in fact the only location where u can get such lifestyle and block size (the block i saw was 1700sqm). So infact it make perfect sense for it to have such growth.
The thing you need to be careful of though, is whether there's any overlays or restrictions as to what you can build there. It's little point having acres and acres of land that's covered in trees which you cannot remove because of overlays. What if there is a limit to the footprint of your house, or the height to which you can build? Bear in mind also that once your neighbours have built up around you, it might limit where you can position your windows or balconies etc when you finally start to build.
What about potential for subdivision? Is there a covenant on the land to state you can't subdivide? Also, distance from the CBD is a relative thing and the prices can vary a lot depending on which side of the city we're referring to. For example, there could be a difference in prices in the East and 12km from the city and in the West and exactly the same distance out. Or what about difference in pricing in houses North or South of the city and at the same distance out?
Tree change is a lifestyle thing and I can see why it would be attractive, but do check out the specifics before you buy. Living at home for the next 10 years is a very real possibility for some Australians I think, including myself, and it might include you if you decide to buy land which has no income at all. Imagine moving out and renting, plus the mortgage on that land…I think you'd have to buckle down and share a house with a few mates and keep your weekly rent down to $100 a week in order to get away with it, assuming you're running on an average salary.
Hi, I'll wager the average price of houses in Crafers won't be 2M in 10 years. We lived in the hills [near Blackwood] and between 1990 and 2000, prices went backwards. There are also all kinds of cheap cottages albeit on big land.
I'll not say Crafers is the hills suburb to go into the 2M average. It's more likely to be Auldana. I saw some $300K ish houses 2 years ago & I'll think they're in the 400K range now.
The other point about buying land is this: what LVR will the banks lend on land?
A friend bought a block of land in Glen Osmond, long long ago for around 25 thousand. Today, the block is worth maybe 300 K?
The same 25K would have bought a modest house which today would still be worth no less than 300K but the rent would be 300 per week.
So $300 x 52 x 15 years [the 1st 10 yrs rent would be less]
Can you afford to live in a 500K house?
Your parents look like they know a thing or two.
KY
so what about buying an old house or cottage in that area to rent out with the idea of building on that block in the future.
This would be a better idea as it would be providng you with income and 'get your foot in the property door'. When the time comes you could do a knock down rebuild or reno to get the type of home that you want. You will probably find tha your tastes will change quite a bit between now and then.
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