Why you should build your investment properties
You could probably think of many reasons why you would want to build a new home on a piece of land in a busy suburb within Sydney. However, there are many additional factors that you need to consider. Whilst investing in property is a good option for families toe distribute wealth, it can also be quite a burden if not handled properly.
Merchant Channels Co are a Sydney based Investment banking and wealth creation organisation that specialise in the creation and transfer of wealth within high net worth families and sophisticated investors. Located in Level 8, 66 Goulburn Street, Sydney.
Whilst we see ourselves as the preferred experts in land banking and residential developments and as mentioned about there are many factors that you need to consider before purchasing and investing in land developments.
The first factor you should take into account is the Zoning of your land that you are purchasing. Also note the zoning of the land around your purchase. Chances are that if your land is one of many lots that has been cleared for residential and commercial developments, it won’t have that “wow” factor. It won’t have the distinguishing feature that sets it apart from other developments. In fact, building your residential development around others there is a small chance that you could be buying overvalued land.
Developments that are done in heavily populated residential areas are seen as less accessible, not in fashion and overpriced for the value of what you are getting.
I suggest taking a look at land that is available closure to the suburbs, but instead of building into apartments, build it into a large house. Over time, the land and home will appreciate significantly in value as it is the only home within a particular radius that isn’t crowded with neighbors.
Merchant Channels Co have a large amount of experience educating clients and walking them through the process of zoning, development application, funding and management of the residential or commercial development.
Vacancy within the area
Since this article is targeted to those whom are seeking an investment property and are more inclined to seek tenants to pay it off you need to be checking the vacancy rates within the area. Vacancy rates are statistics that are tracked by almost every real estate agency within NSW, this helps them produce reports, interpret housing trends and median market price.
The lower the vacancy rate the better in the eyes of all parties. Banks will see the investment as secure. You, the Investor, will feel confident that your are making a wise investment decision. The real estate agent will be confident about their ability to find a tenant sooner rather than later and this will be reflected by the lower fees.
Vacancy is normally predicted or interpreted with other information and statistics.
Land cost and be significantly reduced if you are buying land with an established property on it. Of course that is dependent on the location of which you are purchasing. You are better off purchasing land and building a new dwelling on it. Not only could it appreciate in value faster but it also looks alot better.
Land cost is not a sunk cost, Land in itself is an asset, so you should think about whether or not you can afford to build right away or after checking with local authorities, you might want to “bank” the land.
Land cost is important to consider because it will increase in value almost right away after your new dwelling has been built. Banking land is something that many builders, property investors and local government choose to do as a means of checking out the competition as well as seeing how much you could flip the land for.
There are a variety of builders that have pre-made building plans that can suite a variety of budgets. With pre-made plans for home with 2 bedroom all the way up to 8 bedroom homes in most cases. Building costs can start within the ballpark range from $300,000 all the way up to $800,000 for the luxury building packages.
As a personal rule (my rule) for every $1 you spend on land you should spend $1.5 on the build. Of course you will need to take into account your own budget, but that is just a personal preference of mine.
Your new dwelling
After your new home has been built and hopefully it is something extravagant- you should speak to your bank about having a valuer sent out to value your new home. If you’ve done your research and sourced experts throughout the land and building process you will probably find that your new home has an impressive value attached to it.
Merchant Channels Co has extensive experience in assisting investors sourcing out land and efficient builders to maximize their profits all year around. Attractive returns without the harsh risks or lock ins that other forms of investments have.