Any idea of the general value a property would increase by building a house on a vacant block of land?
ie. I have a block of land valued at $200,000. If I spend $150,000 and build a house on the land will the value be around $350,000?
This is probably a bit of an impossible question to answer, due to many variables.
The value in question is what a Banks' Valuation might be on the property.
That is basically the summation methodology for valuation ie the sum of the parts. Remember that the bank will probably only lend 80% of that value.
Is that how a bank valuer would look at it?
I have been looking at other houses for sale and many seem to be wanting more then house + land costs. Or maybe their houses really cost alot more to build?
I am thinking about building a house and landscaping, etc. But will I lose value? or gain value?
Is there any formula for building and adding value?
Why dont you show the plans to a real estate agent and give some pessimistic figures. He/she will be able to tell you about some recent sales. Also it will not cost you $150 to build – add another at least $70k on top for site costs, DA costs, fencing, concreting, etc.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
It depends on;
– location ( of the land)
– Who the builder is / design ( it's common for newly develop area to advertise as " hardwood homes etc…"
– Quality of finish
– comparative sales in the area
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Type of house I was looking at was just standard brick 4 bedroom from Dixon Homes, etc. Price to build is around the $130K mark. My estimate of $150K completed might be a bit on the low side.
I already own 4 blocks of land which I am looking to build on. I own them outright. They are located between Brisbane and the Gold Coast.
So my quick figures were something like this.
Value of each block is $200K. $800K all together.
If I can borrow 80%, I can borrow $640K to build the first house.
Value after building first house is $800K + $150K. (summation methodology) = $950K
I can now borrow 80% of $950K = $760K – $150K(already borrowed) = $610K
Value after building 2nd house is $950K + $150K = $1100K
I can now borrow 80% of $1100K = $880K – $300K(already borrowed) = $580K
Value after building 3rd house is $1100K + $150K= $1250K
I can now borrow 80% of $1250K = $1000K – $450K(already borrowed) = $550K
Value after building 4th house is $1250K + $150K= $1400K
I can now borrow 80% of $1400K = $1120K – $600K(already borrowed) = $520K
These are just quick figures and there is more to consider, such as interest and rent, costs,etc.
The more value I can add to the properties the better off I become. But there is no point building the greatest mansion money can buy if it does not increase the value. Also the rental return.
So I am looking at what will give me the best value for money and the best rental return.
The cost of adding an extra couple of bedrooms, bathrooms, etc is not that great. Even considering building a house and granny flat at the same time, but will it add extra value?
I am not looking to build and sell. It will be a long term project.
Plus interest payable while building is often not taken in to account..
Also the properties are side by side. So would adding a general recreation area for example add overall value? ie. all tenants could use 1 pool, bbq, etc. Even though they are on seperate titles.
Maybe design it in a resort style?
hi Arbus,
A body corp would need to be established, I don't think that's appealing.
I was trying to avoid body corp as I am not selling the properties. But it might cause more problems then it is worth having shared amenities?
You must be logged in to reply to this topic. If you don't have an account, you can register here.
