hi guys.
Myself (22) and my brother(25) recently inherited a house with no debt attached. Valued at around $350,000.
We both work full time as subcontractors.
The dream is to lend against the house and build an investment property Or properties.
I am a carpenter and was hoping to employ myself as an owner builder?( is this even possible?) and if so what could we expect to hear from a bank in terms of loan amount and terms and conditions?
We are just beginning our research on what exactly to do with the opportunity we have been given and I’m a real newbie at this so any advice on how you would go about lending in this situation would help so much!
Thanks for reading!
Hi Alterego
Firstly welcome to the forum and I hope you enjoy your time with us.
Nice position to find yourself in although sorry to hear about the family loss.
Structured correctly there is no reason why you cannot both use this as an excellent launching pad to set yourselves up for the future.
Without firm numbers it is difficult to comment with a degree of precision buy i would be probably look at an equity loan secured against the property and use these funds to cover your owner builder deposit or access to credit to allow you purchase materials, pay other contractors etc.
No reason why you couldn't then look at a separate loan for the land and gear accordingly.
Check out whether there is a limit in your State as to the number of properties you can owner build in any one year but as i say a combination of owner building and acquiring cash flow properties should set you up for the long term.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
When you say owner builder – do you mean the renovation or a completely new build/construction?
TheFinanceShop | Elite Property Finance
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Either or really doesn’t matter at this stage.
Is one more beneficial than another ?
cheers
Naz
Yes it does matter and it depends on the lender. Lender will have restrictions in terms of LVR that they will lend to. So for example, some lenders will do 60% whereas others will do 75%. Alternatively you can do a hybrid build.
Either way its a no brainer to do the work yourself – just be careful with choice of lender if you decide on a OB.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Are you and your brother both first home owners? You mentioned your brother is a subcontractor as well what trade?
A couple of ideas for you. Could get a 80% Lend LOC on your home.
Could look to buy a site where you could possible develop 3 units/homes etc
use the loc to finance a loan for buying the development site
build all 3 homes using your skills. Your brother claims one as his FHOG grant etc stamp duty exceptions. (Would be different each state, which state you in?), you claim one of the houses as well for your first home. Live in for 6 months to make sure your entitled to your grant.
Have your brother and you sell both your houses. Pay no CGT because they were your PPOR and you've never done this before.
Roll all that money into the 3rd homes debt, which you keep as a rental.
Yes we are first home owner. Apart from the house we inherited, do they take this into account?
We are in Victoria and the first home owners grant is also set to rise in the next month or so?My brother is a floor sander/stainer, a very handy trade for a home renovated as I think it’s adds slot of value for very minimal cost for us!
Love the idea of the three units but I’m unsure if a lender would lend us that sort of money?
Also because I’m a carpenter not a builder would they think the project is to big? I’m confident in my skills and ability to complete a development like this but would they?
cheers.
NazWilko that's exactly what my thoughts and previous comments related to.
The structure of the initial loan set up is the important part and done properly i believe it could be done.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
If you build 3 units you would need to hire a builder. Owner builder can only build 1 every three years. You could put one unit in your name, one on your brother’s, but you’ll need to find one more person you can trust.
Yep I got ya could my brother’s wife do one? Or would that work?
They would be considered a joint person due to being married. If they were just partners and not legally tied, you possible could have.
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