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A house with land

Discussion in 'General Property Chat' started by JackKeily, 7th May, 2016.

  1. JackKeily

    JackKeily Active Member

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    So I don;t have any rental properties yet (I'm still saving up for a PPoR with my girlfriend at the time of writing), I was wondering what everyone's opinions were on properties with land?
    My partner and I plan on buying a Regular house as a stepping stone to what we really want. Something a little small to begin with. The plan was to do this and build a bit of a portfolio in the meantime, and then move to what we really wants afterwards. Our desired property is a nice house with some land for her horses so she can ride around and practice on.
    But recently I've been thinking about getting a property with land and use it as a rental property initially and move into down the track (5-10 years). This way I could renovate the house early on if I need to, and try to claim as much depreciation as possible in the process.

    I was just wondering what everyone else was thinking? Is this a good idea or a bit risky? Is it hard to find tenants for a house that has land?

    If it means anything, we plan on doing this in the Perth area, most likely north of the river.
    Thanks for everyone's opinions!
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    What do you mean by house with land? Are you talking about an average house - they all have land. Ie not an apartment?
    Or are you talking about buying a farm?
     
  3. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    There are plenty of tenants who are after lifestyle/acreage properties. The challenge is often the gulf that is yield on these, where you may be up for a million in purchase price and a rent of $350pw as they are typically a fair distance from the city.

    If you are building a portfolio then having a severely negative cashflow acreage will affect servicing to borrow.
     
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  4. ellejay

    ellejay Well-Known Member

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    Yep, yield is going to be the problem. I don't know your financial situation or where you're planning on buying but in any case yield will be low. If you're negative geared you'll need to be topping up the mortgage payments after rent. Depending on how deep your pockets are it could be very hard for you to move forward towards buying another ip. Lifestyle properties don't generally have huge growth either I don't think so you'll be topping up for a loooooooong time.

    The exception to that would be if you could get a house with land and a second dwelling.
     
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  5. JackKeily

    JackKeily Active Member

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    When I say with land, I mean acreage, I'm hoping to go for 10 acres or more!
     
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  6. Xenia

    Xenia Adelaide Property Manager Business Member

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    Got it :)
    Very nice
     
  7. Xenia

    Xenia Adelaide Property Manager Business Member

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    Yes you can use an average as investment property.

    We have one in munno parra downs -SA where the house is leased under normal lease with farm excluded.

    The farm which has olive trees is rented seperately on a business deal where there is a JV agreement between owner and another person who harvests olive oil. There is a split on the profit and the machinery is located on the farm.
    Also the farm has a seperate water meter to the house.

    Just an example of how things can be split and negotiated to maximise profits and yields for your investments.
     
  8. Joshwaaaa

    Joshwaaaa Well-Known Member

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    As said rental return will be the issue. We are looking to purchase 10+ acres at the moment , one we looked at had a tenant over $700,000 purchase price being rented for just over $400 a week.

    Especially if it's a horse property horse owners never have money they spend too much on the animals (my partner is a horse owner:p)
     
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  9. ellejay

    ellejay Well-Known Member

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    We were looking at buying a place with acreage very recently but the sale fell through. Now thinking its one of those scenarios where it may make more sense to rent, at least initially. They can be really hard to sell on if you need to move on.
     
  10. joel

    joel Well-Known Member

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    Buy on the edge of an expanding town and subdivide
     
  11. JackKeily

    JackKeily Active Member

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    My girlfriend spends more money on her horse then she does on the two of us combined!
     
  12. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Out of curiosity, how much does it cost to maintain a horse?
     
  13. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Excluding agistment costs, about $50pw in feed and care, plus vet costs, plus time
     
  14. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Yep about that and agisting here in Adelaide can range from $30/week for crap or no facilities up to $70/week for nice yards, arenas,wash bays etc. $100 for the same place if they feed morn and night (you supply feed) clean yards etc.

    Vet bills can be a killer too if the horse is in a bad state can't be floated vet has to come to you, and at 8pm on a sat/sun night when it usually happens the dollars quickly stack up.

    It's an expensive hobby for sure.
     
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  15. JackKeily

    JackKeily Active Member

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    Hundreds of dollars a week easily!
    We spent $75 on horse food today, a single visit to the vet has cost us $700+.
    Then there's dentists, farriers, agistment if you don't have the land, riding equipment, the list goes on! They're beautiful creatures, but they're far too expensive!
     
  16. Heinz57

    Heinz57 Well-Known Member

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    Had you thought of renting a horsey acreage and investing elsewhere?
     
  17. JackKeily

    JackKeily Active Member

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    I'm not a big fan of renting really. The plan is to get a regular house before we get a horse property, I was just wondering if I could get a horse property in between and rent it out until we can afford the repayments ourselves.
     
  18. ellejay

    ellejay Well-Known Member

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    Like I said, if you can find one in a desirable enough area, a second dwelling on there for holiday letting can do extremely well for cash flow.
     
  19. Barny

    Barny Well-Known Member

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    Are you allowed to do this? Legally I mean, regarding council approval to earn money if it's your ppor, and insurance wise will you be covered. Won't that fall under a business.
     
  20. Barny

    Barny Well-Known Member

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    You definitely can. But these properties generally are harder and sit much longer on the market if you ever need to sell, as ellejay pointed out. But if your certain you will not sell, then it will work.
    Next year we are making the move to acerage, Macedon, going to rent first to make sure we like it prior to spending. The idea of fresh air, room, quietness is extremely appealing, but we may end up hating it.
     
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