Making Money on House & Land Packages

Do you want to delay building the house as long as possible?
Have you paid ANY monies to this builder yet?
The builder just wants to be assured that you're actually going to build with their company perhaps to make sure you're not shopping builders. Working drawings and colour selections come after signing.
Soil tests aren't free, and as such most, if not all builders will want "some" money down to complete a soil test so as to be able to quote accurately on costs for the Contract. Engineering of the slab can be quite a variable cost depending on soil type.

 

Well, just waiting for the titling which will be next year. My understanding was that once you pay your initial $2000/4000 to confirm the tender price (what I have paid), than you do the colour selection, agree on what you want include, confirm the drawings and then sign the contract just before the titling so they can complete the soil testing too, especially if it`s a turn key project. I think once you sign you are hooked up and things like electrical, elevation, kitchen layout can potentially make the difference one the price later on.

 

23 sq home locked in around 6 months back with fixed site cost.

4/2/2 with 2 living areas and an alfresco.
2550 ceilings, evap air-conditioning , letterbox, clothesline, privacy glass to baths,
Slider to ensuite, stone bench tops, led downlights, lowline striata tiles, front landscaping, blinds, overheqd cabinets to kitchen.

Yhe only overhead is back landscaping and fencing. i think abother 6-8k. final cost 214-216k.

Another 14 sq 3/2/1 with separate toilet and laundry locked in for 174k (all fully complete) with blinds, fencing (half share), front and back land scaping, overhead cabinets to kitchen, apron across 3 boundaries (its a corner), led downlights, stone benchtops, premium facade, all electricals and weatherproof points included. with a gypse rose brick.

Regards

 

just make sure they have specified the allowances for delays, bad weather etc and what they would pay you it they go over the deadline. As the longer it takes to build, the more interest you pay and some builders drag their feet no matter how good they are.

 

whats the expected rent for 4/2/2?
whats the expected rent for 3/2/1? I assume this is armstrong?

 

Nice initial post. I know I'm late to the party. I purchased a block (18x32/576sqm) in Waratah estate in Mickleham (north of melb) in stage 3 for $249,900 in May, which had a bonus landscaping offer with it. They released stage 7a today and I requested a price list. Similar size block of land with bonus landscaping which was slightly an irregular shape (mine is rectangle), is now selling for $279,900. $30k free equity rise in 6 months. I can't wait until it titles in May 17. I'm thinking of over capitalising on this and building a nice 33sq 4 bedroom (with 2 masters), grand alfresco as a first home for me.

 

That's great but why the excess build. Keep it to your needs and what the market will reward you for when you leave.

 

I plan on keeping it and living in it for 5 years. I'm single now and 32, so who knows, I may find someone and start a family. If I do, the house is already there. The total build cost with all costs including land will end up being ~$550k. I find that being 37km from the CBD in such a big house with everything you need in it, this is a pretty decent price. If in 5 years, I don't have a family, I can rent it out or sell it and surely prices will be a lot higher. I plan on buying my second H&L (albeit, much smaller etc.) once this one is finished being built. I think the northern suburbs are relatively cheap compared to the west and SE, but I do believe they have a lot more upside potential because of that.

 

Hi All,

I understood the basics of house and land package about buying when land is cheap in initial releases in estate and then just building good house for living and selling.

I have question regarding finances

* How many land lots you generally buy in one go ?
* Assuming most of estates take average 1.5 years to actually title the land ?
* How you finance those land cost + build costs ?
* Do you keep a pipeline of house and land package to sell and make or one at a time ?
* How do you sell ? Directly or via some agents ?

No one discussed financial cash flow in this whole thread , I read all 13 pages to get idea.

Thank you for taking your time to read and considering to post reply to this.

Thanks @sash for starting this thread.

 

Thanks @melbournian Isn`t it strange to sign the contract before the colour selection? Also 5% Deposit for an house to be built after one year? If so, when do you usually seek finance?

 

No it isn't as I remember a build in wantirna south the colour selection was before the slab was poured. 5% is within the limits acceptable Deposit. My last 3 builds were in cash but u can sign the contract subject to finance for x days anyway. Make sure u got a start and completion
Date guaranteed. Is it because ur land has yet to be titled yet? Also they can't start the paperwork permits etc unless the land has come across in ur name

 

I bought 3 lots in a row once. There is minimal
Financial outlay outside of the Deposit before the land is titled so if u take a loan it kicks in then. Also 1.5 years is good as that is where u can plan what house u want to build price wise search and then organise start dates just after the land is titled

I going through the motions of selling one.now.

 

how are land and house packages holding up in your area at the moment, still strong demand?? anyone, curious..? If you care to name the area/suburbs that would be great

 

Thanks @melbournian

@MTR flat out everywhere here in Melbourne, developers have also risen to 10% the deposit for the land. I think it will be still strong for a while. House are too expensive, a lot of people rent and buy investment properties in new estates or they just move there to have bigger houses and don`t care about traveling.

 

I am completely sold out of all projects I have consulted on. My builder sales rep friends tell me that we are back to the days of buyers scrambling to buy land first then finding a builder to build on it. Buyers will buy anything. Last time I saw this was when FHOG first came out and 3 years before that too. Unfortunately this means we prob only have another year or two before it comes to a stagnation and correction. Guys I know selling homes are selling 10-15 a week, with 70% going through to contract that's an OTE of circa $400k pa.

Prob with a market like this is titles dates slip further and further which is why developers want 10% deposits. Further prices are going up every week by a few grand in some areas. But with prices moving so quickly, on settlement the valuations don't necessarily come in at what the market is paying because the market hasn't settled at those prices yet.

Could be to late to get into Cranbourne Clyde Pakenham Officer for speculating due to title timeframes. I'd still consider areas that haven't yet gone bananas like Melton and Armstongs Ck.

 

@Cactus Agree on everything but don`t see a massive stagnation or correction coming. Yes in suburbs close to the city where we saw +20% for the last three years but not new estates. Migration and infrastructure will go on and on and on for the next 5/10 years at least. H&L is not different to established, need to do your homework first. Need to choose the right estate, lot size and builder. Cranbourne Clyde Pakenham Officer yes too late.

 

I have bought up to 3 at a time in a stage, but I try to buy in different developments so they don't all fall due at the same time. I have found financing two at a time come settlement more stressful. I try and flick some before due for a Profit.

 

i don't see a massive correction either, IMO.

I go to new estate land releases all the time and I'm there early and see the long lines prior to opening. The people are most of the time Indians who are buying lots with other family members. There is a near endless supply of people coming from there... I know some personally and they tell me that they're willing to pay for land here at these prices as if you compare even prices in Clyde/Cranbourne to that of Delhi, which is where they come from, it's chicken feed. Net migration will continue to climb unless a new government is voted in and drastically changes policy, which I don't see happening.

My motto is, today's expensive land price is tomorrow's bargain. All IMO, of course.

 

Sounds good.

 

A couple of tax questions relating to new builds:

Are there any tax breaks availabke for demolishing an existing property where the land is bought separately from the construction of the new house? My assumption is not since it was never used to produce income and is included in your cost base.

For your depreciation schedule with a new build you or your builder know the cost of all the items so do you need to get a professional to do up a schedule (assuming you are confident doing the tax side yourself)? Is your builder signing off that the values you've listed are what they paid enough for the ATO?