To build IP or use land value for equity

Discussion in 'Development' started by Toon, 25th Oct, 2015.

Join Australia's most dynamic and respected property investment community
  1. Toon

    Toon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    275
    Location:
    Victoria
    This is a question for a friend (really).

    He has a vacant residential lot ~800m2, worth ~$150K, owned outright. He is unsure as to whether it would be better to borrow & build a fully turn-key 3/4bdrm home & rent it out or whether to use the value of the land to release equity to fund purchase of existing home/s that can be rented immediately.

    He has an income of ~$100K p/yr, so serviceability shouldn't be an issue, just unsure as to which is his better option.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    4,385
    Location:
    Perth WA
    Both :)

    I'd look at releasing enough equity to use as a deposit for the existing property, then using the remaining equity to help fund the construction.
     
    Toon likes this.
  3. Sonamic

    Sonamic Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,322
    Location:
    Sunny QLD
    Where is it? Maybe a 3 or 4 pack of townhouses? Or a simple Dual Occupancy 4 bed 2 bath dlug one side, and a 2 bed 1 bath slug on the other.
     
  4. Toon

    Toon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    275
    Location:
    Victoria
    It's in Ballarat & I think it's zoned for single dwelling use only, or at least that's what all the other properties in the estate have.
     
  5. 3354

    3354 Active Member

    Joined:
    17th Oct, 2015
    Posts:
    25
    Location:
    Melbourne
    Dual occs and multi unit developments are good in Ballarat. If the Zoning is NRZ it may restrict you to max two units on a block- but check the Schedule. If its says max number of units in none- then only 2 dwellings are allowed. How close are you to public transport, shops, schools, parks play a role in demand and also support from Ballarat council planning officers.