Buying an acreage investment property

Discussion in 'What to buy' started by Mark, 10th Sep, 2017.

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  1. Mark

    Mark Well-Known Member

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    Has anyone bought an acreage investment property? What are the pros and cons of it?

    I am interested in purchasing a 3 acre property in Brighton, Tasmania. 4 bed 2 bath 3 car garage. I think the potential is future subdivision if it can be rezoned. It is about 27km away from the CBD and 5 mins drive to Brighton town centre. Price 390k. Rent 390-420 per week.:)
     
  2. TMNT

    TMNT Well-Known Member

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    Cons: mowing the lawns!
     
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  3. thatbum

    thatbum Well-Known Member

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    I wouldn't buy with the hope of getting something rezoned in the future unless you were very, very well versed in what and how future rezonings work. Even then it is a very risky premise.

    I don't think a "buy and pray because its kinda close to more densely zoned land" is good enough.
     
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  4. Freedom Seeker

    Freedom Seeker Well-Known Member

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    Thanks. I do have concern of additional maintenance, no direct access to public transport and getting tenants...
    However, I think a big piece of land would have more potential and provide more options.
     
  5. willair

    willair Well-Known Member Premium Member

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    Depending on how the property is fenced -maybe ring up a slashing contractor and ask the question what is the costs for that to be done 2-3 times per year..How many large trees are within the fall range near the property footprint..Water supply is another one if you run off water storage from the roof then you have the pumps to run the system..But before you even start a simple phone call to the local council and ask the question if it can be split --Just don't go into this blind ...
     
  6. Mark

    Mark Well-Known Member

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    Thanks. There are very few trees on the block. Town water is supplied to the property. Septic tank is in use. Neighbour is raising sheep on the land so no need to mow grass for the time being. Council said it can not be subdivided with current zoning code. I am hoping it can be rezoned in the future as it is only 5 mins away from Brighton town centre. If it can be subdivided already, I think the price will be much higher.
     
  7. willair

    willair Well-Known Member Premium Member

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    That's good looks like you have most of the out of nowhere experiences covered ..
     
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  8. Angel

    Angel Well-Known Member

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    To consider:
    Brighton is cleared farmland - miles and miles and miles of wide open spaces. Future development potential for the next two centuries.

    Compared to Sydney prices, it might seem "cheap", but you still have the very low population growth to consider - supply and demand.

    Why do I mention this? I once had some locals talk me out of buying an IP in Glenorchy (a long time ago). "It's so cheap, and with water views" I thought at the time.
     
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  9. Mark

    Mark Well-Known Member

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    It is true that Hobart's population growth rate is quite slow. However, it started to boom last year. If housing supply is slower than population growth, the price will increase as other capital cities. Historical data do show that Hobart has similar growth rate as other capital cities.

    I think Glenorchy is still a good place to invest. As there are mountains at the west and river at east, the city can only stretch to the north and south or the other side of river.
     
  10. Angel

    Angel Well-Known Member

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    I cant imagine Hobart's population growth to boom. Crawl maybe.

    What I'm suggesting is to look at Hobart through Hobart glasses, not Sydney or Brisbane glasses. Last time the housing market "boomed" in Tasmania, the prices returned to normal a few years later and remained there for a very long time.

    It is a wonderful market for people buying their own homes to live in, at great prices compared to mainland cities. However investors need to be looking at their purchase from a different perspective than from an "I would like to live there" perspective.

    Tasmania's housing market has been improving for a few years now. Is it close to peak? That is a caution. I am not saying you should not do this, the proposition has merit. I was offering a consideration on something that you may not have thought of yet.
     
    Last edited: 13th Sep, 2017
  11. Angel

    Angel Well-Known Member

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    It is that stretching to the north, and the south, and across the river, that is your disruptor. You see wide open spaces. More experienced investors see miles and miles of developable land as far as the eye can see. Remember the mining towns...........
     
  12. Bozley

    Bozley Well-Known Member

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    Hi Angel
    I'm not sure what you mean when you say prices returned to normal after the last boom in Hobart. See graph below

    [​IMG][/QUOTE]
     
  13. legallyblonde

    legallyblonde Well-Known Member

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    There is definitely no shortage of land around the Brighton area... residential blocks in that area would sit on the market for ages.
     
  14. Angel

    Angel Well-Known Member

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    O, OK Bozley. From my experience, having considered relocating to Tasmania on various occasions, there was an abundance of homes available for sale closer to the $200k mark whenever I have looked at prices and properties for sale. That graph shows the median settling above $300k. Remove the two or three suburbs of character Victorian homes that the average person cant afford anyway, and what is left?
     
  15. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    As a Tassie girl originally, I would never invest in Brighton. In Tassie, people like a 10 min drive to work max and while 27 km seems close to the city for a Sydneysider, believe me it's not for the locals.
     
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  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There are concerns with large lots
    1. CGT main residence exemption concession is limited to 2 Ha. As a dedicated IP that may not pose any issue however.
    2. Is all the property available and used for the rental producing purpose ? If not a pro-rata loss of interest and other ownership deductions may result.
    3. There will be non-deductible issues. eg fencing ?
    4. If the land has rezone and dev potential you may be almost admitting to a profit making intention. Unlike conventional resi where the land and house are tightly integrated its more easily argued that profit making intentions were the goal...That is after all what the original post says.
    5. Land tax ? Primary production exemptions arent given for lifestyle lots only true working property.
    6. Major costs of maintenance. Slashing, weed control, water limits / licenses ?,

    Its easy to be from a major capital and look at Tassie land and prices that way. It may be decades before lifestyle changes in Tas lead to rezoning. More likely the rezoning will be something avoided. ..Take care with assumptions based on major cities in regions.
     
  17. Bozley

    Bozley Well-Known Member

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    Hi Angel

    that graph only goes to 2013. The REIT puts the June 2017 median house price for Hobart at $430. Perhaps have a look at their website for a breakdown on individual suburbs
     
  18. Ed Barton

    Ed Barton Well-Known Member

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  19. The Y-man

    The Y-man Moderator Staff Member

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    Holy moly, for a moment I thought it was going to be an acre in Brighton Vic or SA!!! :eek:

    The Y-man
     
  20. Speede

    Speede Well-Known Member

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    Waiting for syd correction to buy that 25 acres. :p Might be able to split into 450sqm blocks! :p
     
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