Hi All,
As i have been focussing on buying additional IPs to grow my portfolio, i have been putting off construction on two vacant blocks of land that i have in Berwick-NW area in outer SE Melbourne. They are adjacent but have single dwelling covenants on them so only single family homes can be built on them. No duplex or townhomes will be allowed. The blocks of land are paid off as they were bought when land in Melb was still cheap (65k each) so they only cost me 1k/p.a to hold on even if there is not tax advantages.
My current LVR is approx 58% on portfolio of 3M worth of IPs and PPOR(650k) with approx 100k in gross rental income.
Last week i came to know that from May this year all new homes will need to be 6 star energy rated and this got me thinking. As i remember back in 2003 when 5 star energy rating was introduced it caused a jump in construction costs. As I was concentrating on buying Ips elsewhere I decided not to go for construction at that time.
However now I am in a dilemma, whether I should go for constructing these two houses or just sit on the land and buy IPs elsewhere as they come up, will 6 star energy rating regulation cause another jump in construction costs(which are already soo expensive)??? I can afford to construct these as they will be mainly cashflow positive but they still reduce my other investing opportunities as approx 500k of construction will eat into 100k of equity of mine which I can use to purchase IPs elsewhere…
Opinions, comments welcome
...
As i have been focussing on buying additional IPs to grow my portfolio, i have been putting off construction on two vacant blocks of land that i have in Berwick-NW area in outer SE Melbourne. They are adjacent but have single dwelling covenants on them so only single family homes can be built on them. No duplex or townhomes will be allowed. The blocks of land are paid off as they were bought when land in Melb was still cheap (65k each) so they only cost me 1k/p.a to hold on even if there is not tax advantages.
My current LVR is approx 58% on portfolio of 3M worth of IPs and PPOR(650k) with approx 100k in gross rental income.
Last week i came to know that from May this year all new homes will need to be 6 star energy rated and this got me thinking. As i remember back in 2003 when 5 star energy rating was introduced it caused a jump in construction costs. As I was concentrating on buying Ips elsewhere I decided not to go for construction at that time.
However now I am in a dilemma, whether I should go for constructing these two houses or just sit on the land and buy IPs elsewhere as they come up, will 6 star energy rating regulation cause another jump in construction costs(which are already soo expensive)??? I can afford to construct these as they will be mainly cashflow positive but they still reduce my other investing opportunities as approx 500k of construction will eat into 100k of equity of mine which I can use to purchase IPs elsewhere…
Opinions, comments welcome
...
