Starting 0 to 30k to 140k in 15 months

Before stamps and other costs, your gain is circa $100k over 2 years.
I appreciate your effort, but I will play Devils advocate here, at risk of being poo poo'd by other members, but my comment to follow is in the interests of all..

You goto a lot of detail about research done etc. but fact is we just came out of a boom.
All house prices went up in Melbourne over part 2 years...

My old boss who was one of my property mentors told me 'everyone makes money in a boom market, any fool can be a property investor, but making money outside of big boom cycles is hard'.

Same rings true here I think. I am not trying to dampen your achievement, but 40% gain over 2 years during the boom just gone sounds about spot on. I think (within reason) you would have made 40% regardless of where you bought, so not all of the credit comes back to the 'reasearch' etc you have done...
Pat on the back is deserved my friend, just done pat yourself too many times!

Apologies for coming across frank mate...

 

I know your good intention but just would like to have a healthy debate with you.
I think the OP has done really well. Without knowing much about his actual circumstance, but from his post I can see he did use very small amount of cash for the purchase. The holding cost may also be small since the interest on the 5% deposit for the land is negligible. The build time should not exceed 6 months and with a $280k total cost, again the hold cost is not much. Then at completion, he supposes to get a $110k profit before cost (circa 40%). It is also CF+ if he decides to keep it. So in conclusion, minimal upfront investment, minimal hold cost, good CG, good CF. Yes, you may be able to make good or even better money elsewhere with a standalone house let say in Melbourne SE (e.g. Clayton) or North (e.g. Reservoir) or NW (e.g. St. Albans) but this would require much higher initial investment and hold cost and may still be CF- until now. It is not wrong, just different path for different people/investors at different times.

 

Great achievement, I do agree with greyghost that timing has probably played a bigger role.

My opinion is not to get too hyped with the previous results and be very vigilant with your next purchases especially you've got 2 more lands to be settled. Construction cost are constantly going up and home lending is getting tighter.

I buy H&L only for personal use as I never see them as great investment grade properties given the developer would have done everything by themselves if they knew the estate was to sell so well. The only certainty with H&L is the earlier you get in the cheaper the price since the developer control their stock release and they generally inflate their price progressively as they release new lands.

But none the less I like your enthusiasm and keep us posted of your property journey

 

Regardless of how or what. CG of 40% = equivalent of market growth over that time.
I wasn't commenting on CF or yield.

 

I prefer to look into ROI, not just CG. But it is just me.

 

Exactly, most investors would look at the bigger picture.
It's not just about CG, but yield, holding costs, market risks etc...
A few investors on this forum applied a similar strategy to the OP, with similar results. While the 40%+ gains are great, the fact that you could have Melbourne properties giving you these types of gains whilst returning circa 6% yields can't be underestimated.

 

Hi @Greyghost ,

All comments are welcome. What has to be realized is that it is much easy to highlight the the boom when you are just outside the boom.

Yes, I have been lucky. I do not deny that. Rather, I mention it many times but prior to the boom, it was right calls taken at right time.

In the 280k purchase, land was purchased with just 5k.
In the 380k purchase, land was purchased with just 8k.

The reasons of purchase and go with house and land was 10-15% immediate returns and 5% rental yields that i could foresee before the purchases. Looking at the infrastructure and demand, it had taken less than week for me to analyse and decide.

My investment timeframe was at least 10 years so what i got for way better than i predicted or expected. Add depriciation and it is all a plus.

The 280k purchase was done at less than 38k including the one time costs as well. The fact that it is revalued at 390k, gives me nearly 45% or 300% roi.

You are right, I have not given nuch thought on how i will plan further or what i am going to do next. But i am closely tracking all markets and feel i will keep long term targets and not expect to be rich overnight.

I am happy to listen to everyone and apply a strategy that suits my needs. Thank you for your frank comments. I appreciate that.

Regards

 

Thanks @sumterrence ,

I couldn't agree more. Even though I have constantly seen growth opportunities until March this year, these purchases were again done early 2017.

So here is a glimpse:
Land 3 purchased 23 kms north of cbd, 287 sq mt corner block purchased for 193k, currently revalued at 295k by bank.
17.5 sq fully complete home locked at 196k.
Total cost 390k and current end price is 530k+, might be rented at 400 per week.

Land 4 purchased 37 kms south west of cbd, 294 sq mt recrangular block purchased for 165k currently valued at 230k by bank.
18.5 sq fully complete home locked at 206k.
Total cost 370k and end price is around 470k, might be rented for 380 per week.

I am planning to sell one and then use the money and borrowing freed to fund my next purchase/s.

Regards

 

Have you got a recent valuation? Wonder what the price will be next year this time

Remember it's all on paper until you actually realise your "profit"

 

The actual profit will be less. But what's the harm on realizing in paper when you can get equity out.

For price next year; no need to wonder, the market has cool down a bit. But I have reaped my profit for this boom.

A 15% decline after 60% hike harms no one.
Other than who purchased at peak.

Regards

 

I think the point is that it was a gamble that paid off due to a crazy boom. You can make 1000% gains on small cap stocks in a matter of months, is that luck or skill?
Lot of subcontinent investors have put deposits on land yet to be titled hoping to sell for an easy profit, I think they would be getting worried now..

 

Well, thabks for the view. However, the purchase intention was long term hold with 5% targeted yields. This was my first one. I bought 3 more after that and last one settles this month.

The gamble was in the last one purchased 2017 Beginning. Have gained enough that a 10-15% drop would not harm too much. I will try to build and offload the last one though to lay my hand on nsw markets. Yes, those who bought after 2018 sep/ oct might be in trouble now but different directions in vic are behaving very differently.

Regards

 

Hi All,

Been a while and I am now looking to consolidate debts so thought I will post another one in continuation. Posting link here for anyone who was tracking this thread.

Here is the second post.

Regards
Ashish