Hi all,
just looking for some feedback. My husband and I are considering developing our block of land in Frankston-it’s about 800sq so we think we could get 3 townhouses on there. We already have an investment property in Armadale (VIC) worth around $500,000 (we owe $243,000). Whatever we do is to fund our retirement. Our question is around finance. We are considering selling the Armadale unit to partially fund this but it has grown well and we expect in 10 years it will be worth around the million mark. Based on todays prices a townhouse in Frankston is worth $400,000, and so in 10 years the three would be worth $2,400,000 (hopefully). Currently we owe $170,000 on the land in Frankston. If you were me would you try and hold Frankston and Armadale if the bank will fund it, or would you sell Armadale to go ahead with the new build?
Thanks in advance,
Landt.Hi landt64.
The good thing is you know why you’re investing and what you want to achieve. To me that’s the first battle. From there you can really break it down to what the numbers say and how it matches with your aims. That will be your best hope of making a good decision.
One point – projecting capital growth is an ‘interesting’ exercise.
Andrew
itsandrew
Go as far as you can see and you will see further.
Hi Landt
Without the full numbers it is difficult to ascertain whether the development cannot be funded.
I would need a lot more information to provide a more structured response.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
1) get the actual bank valuation – around 500k is only a starting point. You need certainties
2) from there equity Available without selling the investment property around $157k
3) where do you live if if you have a rental property and then a block of land. / additional funds might be there
4) incomes would have to be sufficient to support the loan/s unless equity requirements can be met and full debt coverage- which means presales. 2 homes sold would cover the cost of construction
5) list your expected current value of the land – as that is important to work out if you actually have equity there also list your current incomes of all parties involved. If your total incomes are under 50k a year you might not have a good chance of securing loans except through presales and full debt coverage.
6) 3 homes is good would come under residential lending at 80% LVR.
7) town planner advised to actually determine if you can get 3 on the block, with perhaps a drafts person for a quick sketch of basic site plan to take to council to get there advice.
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