We are amongst the property investing party and cannot wait to begin.
We both work full time and have no debt, just renting at the moment,
While we want to buy an IP, we were thinking of buying a block of land, and putting 2 houses on it, and renting one out and using the other for our PPOR
Thoughts?
We dont ever want to sell it – but we will check with council for subdivision eligibility down the track. Land is about $130 and a 4 bed, 2 bath and double garage home is $140 K. So 410 in total and we have $40 deposit.
So we plan on renting out the 2nd house for $350/wk
repayments principal and interest are $620/wkThoughts?
Can we deduct a portion of interest and claim depreciation form our rental house?
Also – the first home owners grant, you have to live in for min 6 months as PPOR but could we still rent the 2nd one as soon as we move in?
going to talk to accountant this week though…I personally wouldn't do this.
It must be a big block of land to fit two houses side by side?
I also think that you are underestimating the build costs. $140k is probably the bare minimum to build a 4BR house which would not include site costs (add extra $10 to $30k) or flooring, outdoor area, driveway, fencing, gardens etc.
I'm not even sure you could class the 2nd house as an independant property since it is on the same title as your PPOR and therefore it might be considered just an extension of your PPOR (and therefore cannot deduct expenses). Like having someone board in your house.
Not only that, you would be the first point of call of these renters when they need something.
As a renter, I would not want to be living right next to my landlord.
Honestly, I'd go get a full quote for just your house build and make sure you include everything to make it liveable…including site costs. Then if you think you'll have some cash left over, look at using that for a deposit on a seperate, already built, investment property.
It sounds like you've not built before and if that's the case, you don't know how easy it is to go over costs in 1 build let alone 2 builds.
Not trying to dismiss your idea altogether, but it just sounds too challenging and complicated for first home buyers.
Good luck anyway
Its a long block, and putting one house behind the other.
$140 is all included, fixed price.The house wont be an extension as it will be subdivided…such as 5a and 5b…
Have you built before? haha your right I haven’t built before but im trying to come up with win win scenario’s as my partner wants to buy PPOR and I want to buy an investment property haha.
I dont want to buy PPOR with a new home as then all our deposit is gone and we only have a PPOR and no investment…AS it’d be a new home…there wouldnt be much to do in order to add equity – so we’d have to wait until we repay off a lot or housing prices increase…
Only when equity is below LVR of say 80% then we could look at investment property as the interest on that equity loan would be tax deductible…
BUt your right the accountant may agree with you that we cannot claim some expenses as its a extension…hopefully not though![email protected] wrote:Its a long block, and putting one house behind the other. $140 is all included, fixed price. The house wont be an extension as it will be subdivided…such as 5a and 5b… Have you built before? haha your right I haven't built before but im trying to come up with win win scenario's as my partner wants to buy PPOR and I want to buy an investment property haha. I dont want to buy PPOR with a new home as then all our deposit is gone and we only have a PPOR and no investment…AS it'd be a new home…there wouldnt be much to do in order to add equity – so we'd have to wait until we repay off a lot or housing prices increase… Only when equity is below LVR of say 80% then we could look at investment property as the interest on that equity loan would be tax deductible… BUt your right the accountant may agree with you that we cannot claim some expenses as its a extension…hopefully not though!Ok then, $140k all included is a great price. I haven't built before but my parents are building at the moment and their costs are going to be around $240k, all included. Not sure why there is such a large gap. I was going to build at one stage and my costs were going to be over $200k as well (but I ended up not going through with the project).
You did say you were planning to subdivide down the track, which is why I recommended against it. But if you subdivide and split itno 2 blocks before building, then that would be different. You could quite easily seperate it out as a PPOR and an IP.
Maybe, you go just for the PPOR for now (and position it so that there is room for the subdivision later)…see how that pans out…re-visit your finances…and then look into getting the subdivision done.
It would be less stressful than trying to 2 both projects at the same time.
Good luck, whichever way you go
You must be logged in to reply to this topic. If you don't have an account, you can register here.
