Land in Melbourne as investment?

Hi everyone!! I was having a conversation with someone the other day in regards to purchasing land and selling on once titled...I'd be very interested to hear from anyone that does this or has had past experience in doing this.....a good investment strategy? or best off buying house and land for long term? Thankx

 

Do a search for H&L you'll find plenty of info.

 

Good strategy of you buy early in the cycle but the intention should be to build.

Eventually, you might even end up with a loss if not bought well.

Regards

 

i always wanted to know if you buy early in the cycle and sell once titled..can you make money or you have build to make a profit?

 

please follow the posts from
Sash
Cactus
Melbournian

Check house and land threads. And you quill see ton of info.

If still you have doubts, posts on those threads for better visibility to your posts.

Regards

 

if you bought in the early 2010s and try to sell - most likely not. but if you bought like 2 years ago and try to sell now, very likely though you not benefit from the CGT discount though as there was no house and purely empty land which has no rental to show for.

The H&L market if you go back 4+ years in melbourne wasn't as active as today

I remember saying this a few times - you could walk into office and showroom, say I wanna buy 2-3 lots - what kind of bonuses and stuff are you going to give ? 5-10k off plus 2-3K of Bunnings and Coles vouchers Nowadays you end up in ballots and only if you got pick - you can buy. times have changed

 

Sort of confusing this bit. I would replace cgt with neg gearing. Can still get the cgt discount but the tests are different. Other taxes to consider are gst and stamp duty.

 

Couple of things:

1. Read the contracts ...some developers will not let you do it and most will not let you advertise it openly....
2. Nominating to someone needs to be water tight...if they person who you nominate to can't settle you still need to settle. Make sure that they lose their deposit if they can't settle....it is business
3. Buying at the right time and estate is paramount

This still requires some skills and foresight...it is not as easy as it sounds....

 

thanks @sash @Cactus @melbournian

 

Take care with buying land as an investment. The GST can destroy profit. Yes - GST applies to the sale and the purchase too !! [I assume the land value is more than $75K)
Get that process wrong and perhaps BOTH. But if its planned well and the timing is right it may be a triviality BUT you need to cater for it. And if you buy the land from a developer (eg a new estate) it is highly likely it will be taxed on purchase AND on the sale seriously eroding profit margins since 9% of the sale price is lost to the ATO.

GST applies to land and unlike an existing residential premises it is taxable.

 

What @sash said.

Most new estates have contracts and covenants preventing the sale of land before building, or giving the developer first right of refusal.

Regarding nomination, you can nominate someone else to settle, but they are under no obligation to actually turn up and settle. Your still on the hook, albeit with 10% of their money. Nominations in Victoria have to be for the same price. You cant ask your nominee to pay you extra, either on contract or under the table. To nominate for a profit means you need to pay stamp duty twice, once on your purchase price and on the second purchase price as well. This involves a new contract, see above about covenants in new estates.

If you still plan to buy and sell, factor in the build, and holding costs during construction as well as cgt. There may still be money in it, but the risk is the market turns before you find a buyer. Or the estate down the road opens up and gobbles up all the potential buyers.

 

Not a fan because it involves servicing a non income producing asset.

 

OK get that...have you changed your mind about outer Melbourne? This one around the corner from mine just sold for $723k. I bought mine..a smaller block for 170k.

17 McCormack Crescent, Hoppers Crossing, Vic 3029 - Property Details

 

I think what many miss to note, is that buying an IP will a land component is also an investment into land, with no need to sell, being able to leverage equity out, and best of all I like when the land valuation exceeds the actual total purchase cost of the IP (if bought well and eventually over time).
I must say I hate paying all that land tax BUT as my mentor would say, "Don't wish it was easier wish you were better. Don't wish for less problems wish for more skills. Don't wish for less challenge wish for more wisdom."

 

Never said land/outer Melbourne didn't perform.
I am glad for those who have invested in these parts. You are a testament to those who have and a guru in this area Sash.
My comments were around bread and butter property investment: gentrification, income growth, km rings, affordability etc in investing in the best suburb closest to the cbd as possible.
Looking for consistent year on year higher % growth over 10-15year period.

Well done to you and others!

 

That's a Jim Rohn quote. Huge fan of his.

 

Spot on, huge and greatest mentor of mine! I love to practice what he preached.....

 

Likewise! Incorporating some of his teachings into my life has taken me to heights that would otherwise have never been possible.