Is this a right property investment for us?

So why do you need five bedrooms?

 

Its nothing to do with your financials. It's overcapitalising and accepting unnecessary risk . If we're talking 'investment', I wouldnt do it .

 

even a 4 bedroom isnt any cheaper in this area! look at the most recent sold properties in the area :
101 Mcpherson Road, Sinnamon Park, Qld 4073
42 Northbrook Street, Sinnamon Park, Qld 4073
12 Lightwood Place, Sinnamon Park, Qld 4073

unless I go for 1 parking house which I wont for sure !

 

There was a topic Matt B that I created on a similar line to this about development (specifically for investment purposes though), about how is development worth it if your 'paper' margin is neutral or negative at the end=your total 'costs' are $550,000 + $300,000=$850,000.
Yet you are creating a house worth very close, or even under to that mark.
So you are ahead by well nothing at the end based on current prices.

Most on here (PropertyChat) are highly against the idea of neutral or negative development margin.
If you're aim is to sell in 5 to 6 years time then be confident in the growth of your property.
Because at the end of the day, if your suburb say grows at 3% per annum, then you have 3% on a bigger number (3% on $550,000 versus $900,000 or whatever) & its simple maths.

If you said: I want to sell it in 30 years time.
Then I think so long as you are willing to swallow the risk that in the short to medium term if you are forced to sell your house you will lose money, then no worries as after 30 years time the price would likely be far beyond that $300,000 construction cost to not really matter.

People do this neutral or negative margin strategy, they do, but it is very risky to do particularly over a short term like 5 or 6 years.

One another note:
Try not to focus solely on the resale value either, if this $300,000 you are spending means that for example:

• You will be better at your job and that will earn you more income over the 5 to 6 years then maybe it might be worth it=e.g. a sportsman building a home gym or setting up a home office so you don't have to commute everyday and pay those fees
• Will it make you just generally happier=what effect will this have on other things in your life?

It does sound though like you are creating a needlessly big house=266sqm is a very big home & you have lots of toilets, a spa etc.. So from that perspective yes overcapitilisation.

 

Much bigger land though. Also an extra bedroom doesnt add much value because a bedroom is just a wall.

 

You seem to be emotionally involved in this decision - why?

If it's 'really' about investing, it's all about the numbers, risk and opportunity cost.

There's no margin there from a numbers perspective but you're still persisting, so I'm interested to know why this is close to your heart.

 

The op wants to get a bigger house in the area but needs to justify the expense. On that size land, your probably overcapitalising.

But if its ppor, maybe the emotional value is worth it?

 

I agree. I think there's a lot of people out there (not just the OP) who want to spend to upgrade their PPOR, and at the same time want to be able to financially justify to themselves and others.

Unfortunately, asking a forum of cold hard investors will often get the cold hard response!

To anyone in the OP's situation - by all means upgrade your PPOR, and its really no one else's business to tell you whether you should do that or not. But if you asking for honest financial advice, we're not going to sugar coat things for you - financially there is an opportunity cost, just like nearly any personal purchase.

 

This is not unfortunate ! I exactly wanted to know cold heart investors's advices ! I changed my mind about this extension. I don't proceed !