VIC Land banking in Bendigo

Discussion in 'Where to Buy' started by Kidgeeq, 20th Jul, 2018.

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  1. Kidgeeq

    Kidgeeq Active Member

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    Hey folks

    I’m looking at spending a maximum of $500,000 on a property of 1.5 acres PLUS
    In regional Victoria

    At the moment I’ve got my eyes set on Greater regions of Bendigo

    Looking at holding 10 years plus

    I’ve been a long time Melbourne investor and know little about regional, however I do see a lot of potential in Bendigo.

    Looking at properties roughly 10minut3 drive to Bendigo cbd

    I’m wrong to suggest this would be worthwhile in 10+ years considering the fact Bendigo is rather established


    Thoughts??
     
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  2. jefn89

    jefn89 Well-Known Member

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    What's your due diligence telling you i.e. what is the likelihood of council re-zoning, what's your experience with doing this? Why are you doing it? (probably to state the obvious to make a profit but why land banking, do you have experience with this strategy?)
    What do the numbers look like best case i.e. you can sub-divide, if average case, not sure what average is as the strategy would either be sub-divide or sell I suppose.

    For me there's better ways you could deploy your money. I mean 10 years is a long time for a start and it also depends on what your goals are as well. If you want to retire in 15 years or even 20, could holding up all your cash in this strategy, not knowing your income but or other debts, prevent you from the "end game" whatever that may be

    Personally wouldn't be my strategy because maybe best case you sell in 10 years for what 5 million, big maybe there, and then you've got holding cost, capital gains tax, no income while it's land banking.

    Again I'd look more at the outcome rather than the area. Area is important for the strategy although what profit outcome do you realistically feel you can achieve and what's the risk, then it's down to the numbers :)

    Hope that helps!
     
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  3. Kidgeeq

    Kidgeeq Active Member

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    Thanks for the input

    I’m 25 and have plenty of time before I want to retire.

    Subdividing will be the eventual plan. I’d like a block that will be neutral cash flow and wouldn’t be difficult to rent out, hence Bendigo.

    I’ve land banked on small blocks in Rockbank area before.

    My main strategy is bread and butter family homes in outer Melbourne suburbs, but I’d like to ad an acreage to the mix
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    if u need to borrow, the lack of an income and no neg gearing may be an issue

    ta
    rolf
     
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  5. Ko Ko Naing

    Ko Ko Naing Mortgage Broker Business Member

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    Have a chat to @Xiao Hui He knows ins and outs of Bendigo. :)
     
  6. jefn89

    jefn89 Well-Known Member

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    Hey Kidgeeq,

    Seems like you've got a reasonable handle and track-record on the strategy so if you're confident, the numbers stack up and that's the strategy you want to pursue then I'll leave you to pull the trigger.

    As I mentioned there's not enough profit in these type of deals to justify the potential risk, holding costs (unless there's a property on it generating some rent) and it wouldn't get me to my goals quick enough, even though I'm also in my 20's myself.

    All the best though if you decide to go ahead :)
     
  7. TMNT

    TMNT Well-Known Member

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    Would this land produce any income? Ie a house or is it vacant

    If its no income this is a big negative thta would mean the cg would have to be very decent
     
  8. Kidgeeq

    Kidgeeq Active Member

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  9. Dave3214

    Dave3214 Well-Known Member

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    Just upon seeing that the Bendigo property is a substantial 18 minutes from Bendigo, which would mean maybe at least 15-20 K's away...this property zoned rural in Moolap Station Rd Moolap is by contrast only about 6 K's from Geelong's CBD, and a 10 minute trip tops.

    However it is zoned rural, but at a price guide of 800K.....it's something that could be a longer term possibility. Although having lived in Newcomb since i was a kid, and i'm 50 now, these large allotments have always remained rural zoned.

    It's quite odd in a way, as it's only as far East of Geelong's CBD as probably Bell Post Hill is North!!

    73 Moolap Station Road Moolap
     
  10. Big Will

    Big Will Well-Known Member

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    There is a lot of vacant land that would likely need to be developed before this property will be given the go ahead.

    upload_2018-7-24_16-20-3.png

    Further as it is on the east side of the highway it is likely the west side would be done prior - so even if I was contemplating this as a really long term land bank being on the westside would likely save years off my holding cost.

    Also by reading the advert they are not targeting landbankers so you can figure that even the REA knows this is not their target market. Because if there was some potential the ad would look something like this;

    45 Heritage Way Mickleham Vic 3064 - House for Sale #128174502 - realestate.com.au
    Notice how the photo is showing how close you are to where the development is up to so now you are talking land banking - although the hidden search range is 1-3M but you get the idea :).
    upload_2018-7-24_16-25-29.png
     
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  11. Big Will

    Big Will Well-Known Member

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    Thought I would send through the google satellite view to assist with above.

    upload_2018-7-24_16-27-59.png
     
  12. Xiao Hui

    Xiao Hui Well-Known Member

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    Land Banking revolves around the concept that land prices will go up over time so one can make money by buying at today's price and selling in the future at a higher price.

    If one is to buy any land in the last 4 years, be it farming or rural, 45km around melbourne city, one will do well. This happened due to the great demand for property in the whole of Melbourne market, aided by the inflow of funds from overseas buyers, leading to what some says even - speculation in property prices.

    Unfortunately, making money this way in Melbourne doesn't mean it will apply to Bendigo.

    Firstly, Bendigo still have lots of lands around where houses can be built on. I remember seeing the council report saying that the current land supply can meet demand for land until 2030 at least? So chances of any rezoning of farmlands to Residential will be low. Added to this is there's still many properties in Bendigo proper that have big blocks of sub - dividable lands. So in short, there's enough of lands here for the next 10 years at least.

    On the other hand, the population growth of Bendigo, though fast compared to other regional towns, is still not as great compared to Melbourne. Plus, it attract mostly the local Aussies and not the rich Asians. This means any growth in property prices will be gradual and steady, not the type of big hike experienced in Melbourne. This is not good for land banking as capital growth will be slow.

    Even if you feel that it's worth buying just land and sit on it, one has to be mindful that there are many prohibitive usages to a land in Bendigo compared to those in Melbourne. For a start, Bendigo is a mining town. Many areas have mine shafts below which are not conducive to building. Worse, some properties have contaminated soil with arsenic in it. You need to spend a fortune to treat that and this can only be known if you do a soil test - it's not in section 32 even!
    Being surrounded by forest, many areas in the new suburbs have bush fire overlays which increase cost of building. In short, land Banking is a risky undertaking in Bendigo and more complicated than melbourne. You might end up buying a land which is so hard or so expensive to subdivide that it's not worth banking it in the first place.

    If land banking is what you insist, i would suggest buying a 1200 to 2000sqm land, in an existing surburb, best with a house on it too. This gives you some rental income while you wait for the value of land to increase. Time is on your side now as the demand for rental houses here is great. It is also safer than buying a farmland as a mature area gives you greater certainty in sub - dividing and building. Buying a property of above size also gives you a 4 lot subdivision opportunity. This is popular with small developers as it is small enough to control the costs of building yet big enough to have efficiency in doing it. Once you know more about councils requirements and the profit that can be garnered, you can then proceed to buy bigger lands. This should be the safer way.
     
    Last edited: 24th Jul, 2018
  13. Fargo

    Fargo Well-Known Member

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    Have you done any due diligence? you might be better going to the casino, so come what may , at least you can move on. I don't know, but my guess is that if you ever could subdivide it would only be into 2 lots. There was a lot of flooding in that area about 2 years ago and fires before that. Did you notice the creek? I expect there would be a 100metre setback from that and another 100metre setback from the highway, you might want to check that out. I don't have much knowledge on Bendigo but I did look at it 10 years ago. Have you looked at Strathfieldsaye or Maiden Gully ? You may even be better to go north of Bendigo and buy some real farmland on the edge of the irrigation districts and catch the wave from the boom there. Your in no mans land. It is not farmland My guess is it will be a long time before it is ever more than RLZ(rural living zone). It may get some CG but at large opportunity cost. Just my opinion and I have been wrong before.
     
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