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Development in Officer

Discussion in 'General Property Chat' started by eskander, 3rd Apr, 2016.

  1. eskander

    eskander Well-Known Member

    31st Dec, 2015
    NSW » Central Coast
    Hi guys
    I have a friend that has just purchased land in Officer with a view to build a PPOR.
    A little background: This friend has absolutely no background or experience in property, has done minimal due diligence, and been receiving 'advice' from an accountant.
    She has already made some pretty critical errors before telling me about it so I am trying to help her as much as I can with my very limited knowledge of development and property in general.
    1. She has drawn a loan jointly with her boyfriend, and has been advised that this is no different to doing it separately. I have told her this will not only make it very messy if you separate but will hamper your future borrowing.
    2. She has been told that a bigger block of land is better. Her block is 550sqm and she paid 250k so I think that she is paying a premium for a block with the same potential as a 300 or 400 sqm block i.e no subdivision potential.
    3. Planning on building a house for 300-350k. I have told her this is way too much to pay for an area like this, even for a PPOR. She was also not aware that the bank will need to value the house at the end and so I think that if they paid for an expensive build this might not translate to a good valuation later on due to so much stock in the area.

    My advice to her has been to see a mortgage broker about what the best loan structure is. In terms of the property my opinion was it would be best to rent in the area for 350-360 pw and then build a cheaper property suitable to rent and be able to access benefits of an IP like depreciation, interest deductibility etc.

    Sorry for the long post, but I wanted to get people's thoughts on what steps she should take next and if my advice has been incorrect, as well as general thoughts on development in areas like Officer.
  2. Cactus

    Cactus Well-Known Member

    18th Jan, 2016
    I'm building 4x IPs in Pakenham and 1in Beaconsfied right on border of Officer.

    I'd stick with a smaller block like you suggested. I can get a 4/2/2 on a 304m2 block. Any bigger is back yard and a plus but not worth more than $10k if your planning on renting it. I try not to spend any more than $200k on house and I get 4/2/2 stone kitchen LEDs 2550 cielings and all floor coverings for that.
  3. thatbum

    thatbum Well-Known Member

    18th Jun, 2015
    Perth, WA
    Well my initial thoughts that since its your friend's PPOR, a lot of the considerations you've raised might not be as important.

    Its a big stretch to say she's made "critical errors" - maybe that's just what she wants? Depends how much she values the financial aspect I guess.
    Cactus likes this.