Buy and Hold New/ish properties

I never worry about tax because I operate a property business and I use strategies to massively reduce my overall tax.

I am far more interested in profits and for those who have been around the block a few times will understand that property does not consistently rise.

Therefore holding property in downturns means investors can actually lose money and opportunities to use capital to make more money.

MTR

 

Bought NRAS resale recently in Melbourne, CBA desktop valuation 3 months after settlement came in 26.7% higher than the purchase price. 10.5k positive per year after depreciation and NRAS payment. 7 years of NRAS remaining. This little IP should be a nice booster to get me to where I am going in my own little race.

Did not buy this from @euro73 but I did learn so much from his posts...

 

This is exactly my thoughts, because of there is some lack of knowledge and negativity to NRAS it could represent good buying opportunity on the secondary market. Well Done! on your purchase.

I think it probably helped that NRAS payments took so long to go out, maybe some people got a little burnt...

 

shhhhhhhhhhhhhh... it's all overpriced, no growth, useless rubbish, remember???

 

Dubs

 

Hi Euro,

I have learnt a lot fromto ur posts, specially numbers. But I am sorry to say as the recent few sales that I have come across does seem to be overpriced.

If an investor is buying a property well below median value or is habitual of buying bmv properties, buying NRAS over market price will definitely seem to be a costly deal.

Targeting a new property which will give instant 15-20% equity, are positively geared and give additional depriciation benefits at the end of year over that marginal positively geared amount is an equivalent deal imho.

Having said that, not just NRAS, anyone who bought in boom has been benefitted by buying properties. And those who are buying, many congratulations to them.

The motive is same, financial independence. Everyone may take a different route. With the recent deals I saw, i did see better/ similar growth without NRAS and brand new properties.

Regards

 

Congratulations @meme plecko

Did you buy below median when you purchased? As the growth in melbourne is not as high as the evaluations have come up?

Is the current price over the median or below the median (or considering theprice of similar properties)?

 

@ashish1137, yes, below median and discounted compared to similar product in the area, hence higher desktop valuation 3 months later

 

Merrylands 2 bedders are priced at 610K. Have val support at 645K ...

But in the end, because NRAS must be attached to new stock, it's unusual to find deals well below market value. The best opportunity to find NRAS at any significant form of discount is re-sales from people who over committed and are in need of a quick sale. That could be because of a change of circumstance such as divorce or the need for cash, for example... but they arent easy to find...

 

As a FHB looking to get into property investment, the FHB grant and stamp duty concessions make house and land packages enticing but the vast reading out there indicates these are to be avoided as all you're doing is handing over your grant and stamp duty (and more) to the developer who has priced it so there is very little left for the buyer other than the hope of land value growth. This seems riskier than established homes where there are other potential value unlocking strategies available and more chance of being able to buy below market value.

Some of the posts in this thread indicate however that it can still be possible to find deals where you're buying below market for house & land packages. Of course buying anything below market price (be it houses, cars or tuna fish) is always a good deal but what are some of the ways for buyers to assess what the right and not overpriced value for house and land package (given comparative sales are on established properties with generally larger land components)?

 

Land and House packages are good when you are buying at beginning of rising markets, and early stages of estate/land sub divisions.

I am currently getting rid of old and trading for new, I just replaced 4 air conditioners, a very costly exercise, killed my cash flow

 

Here is how you can figure out that you have bought below market value.
1. What cycle the state is in?
2. If the market you are targeting is behaving differently than the state cycle? Example outer ring first home buyer entry market.
3. You need to see at what price you are sourcing the land for.
4. Try doing land and build separately. This will save you money positively.
5. When house and land package is quoted, ask for a turn key product. Usually builders will not include things like
overhead cabinets in kitchen
Ducted heating
Evaporative air conditioning (or any air conditioning)
Fencing
Front and back land scaping
Blinds
Clothesline
Letterbox
Appliances (benchtop+oven+cooktop)
Dishwasher
Brick choices
Render and
Type of facade

This is not an exhaustive list but what is on top of my mind while comparing the quotes.

After you get a quote from builders for l+h, compare the cost of sourcing land separately and then the build. It sounds easy, but requires a lot of effort.


On my first two builds (and first ever purchases in australia), the total value of two land and houses stand at 660k while the speculative equity is around 80k. At 10% deposit, that is more than 100% return over the duration of 2 years time.
This is not taking into account the growth a new build and initial stages when i entered an estate.
Over the period of last one year, the estate has also increased 37k on a similar block of land.

Offcourse that had been possible with help of fellow pcians and pro investors who lend their support and knowledge which has lead me to achieve this.

Thanks to all.

Regards

 

some good points

4 is the best way to max profits from house and land.

also timeframe to build home needs to be considered and where you are in terms of the cycle when you commence building