VIC If you had my land, what would you do?

Hi Guys, quick question, what would you do if you had my land, here are some facts about the land and what options we have:

Facts:

• 250 sqm block in Melton South.
• Purchased for $174,000 last year, settling in June, have been offered $240,000 for the land already.
• No sunset clause.

THREE OPTIONS:

1. Sell the block, make $64,000 (After Stamps, etc) - Simple done and dusted.
2. Build - Have been quoted around $250,000 for an 18SQM home PLUS $174,000 = $424,000 / Same profit margin as selling the land as - Could sell for $520,000.
3. Keep the place, rent out for $370.000 a week - would be cashflow neutral....

 

You're missing the most important bit - what would you do with the 64k?

Holding onto it compared to...what?

 

Good question, CGT will be minimal, i could top up super, use it to buy another property, but most likely, i could debt recyle and use the funds for shares...

 

How are you calculating CGT?

 

Land under a family trust, accountant has indicated some figures.

 

I have the same situation. I bought a block 425sqm in Winter Valley (Ballarat) for 185k Jan 2021. If I kept the land and built a 23sq home it would cost me 270k turnkey. Add to that 10k in Stamps and legals it will cost $465k. Same places going for 580k.

I made the decision to sell ...the land is worth around 320k. A builder will onsell. So no sell costs. The profit is about $130k. So a little more than if a built. So I am selling in this instance as I can deploy me money for much better returns.

 

I am in the same position here in Bendigo - I bought a 700sqm in March 2021 for $240k, now worth $350k.

If Melton is anything like here, there may be a bit of a premium for titled land. Depending on how much stock is on the market when it titles, it could be worth holding on until then.

Don't like the idea of building (at the moment) for a few reasons:
- $174k seems a bit light....perhaps the builder will be even more likely to hit the obligatory $30k rock when excavating foundations....
- extra costs (which I'm sure you've factored it) such as landscaping, window furnishings...plus increased real estate commission
- lack of cash flow for the time period of construction (if that's an issue for you)
- Based on your numbers, $32k additional profit for $174k additional outlay...it's a good return, but not THAT good at the moment...

Having said the above, the share market doesn't excite quite as much as it did this time 18 months ago...

 

I have to agree with you both, the risk is far greater then the return at the moment, also the amount of builders that may go bust, is not worth the headaces, i work in supply chain, and most of my clients are in constructions, and things are quiet bad.