Has anyone built a spec home and is there a formula to work by as to what profit margin you should aim for, so you can decide if it is worth doing after paying tax etc. I would appreciate any information you could give me. Thanks Jason
Building A Spec Home
- Thread starter megsaletta
- Start date
I suppose that it depends how much you WANT to get from it.
If you are able to put it all together with a good builder who will help you - then it may only require a couple of hours work and then just paying the progress payments on time. In which case - if you get $60k from it you might want to be happy with that.
I get the impression from some people I deal with in my business that they are seeking the HUGE returns that were experienced during the boom - they wont settle for less than $150k plus - but they end up holding it and paying the mortgage and leaving it empty!
I would be happy with $50k - $60k on the Sunshine Coast - where I live, but I am sure you could get more depending on your chosen area?????
If you are able to put it all together with a good builder who will help you - then it may only require a couple of hours work and then just paying the progress payments on time. In which case - if you get $60k from it you might want to be happy with that.
I get the impression from some people I deal with in my business that they are seeking the HUGE returns that were experienced during the boom - they wont settle for less than $150k plus - but they end up holding it and paying the mortgage and leaving it empty!
I would be happy with $50k - $60k on the Sunshine Coast - where I live, but I am sure you could get more depending on your chosen area?????
I have been thinking about a specky for a while but paying 50% CGT on the sale price makes it not worth while IMHO.
If however, you rent it on completion then there is no tax payable and you have basically got the house at a wholesale price. So, it's a way to create positive cash flow straight away.
Cheers,
Bazza
If however, you rent it on completion then there is no tax payable and you have basically got the house at a wholesale price. So, it's a way to create positive cash flow straight away.
Cheers,
Bazza
The price of sites ain't cheap these days, neither is the cost to build spec homes. Labour and materials have gone through the roof in all capital cities in the last 5 years, more so in the country cos of transportation costs. Long gone are the days of $200k turn key house and land packages. Things are a lot pricier now but thats not to say you can't do them for a tidy profit - if you already own the site for years at a low entry point or you're a well connected tradie. For the rest of us trying to spec, buying wholesale and positive cash flow are mere buzzwords... perhaps better suited on the shelves of Dymocks...
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I'm glad that you have that opinion, just less comepetition and more money to make for me.
People go to work 5 days a week for 48 weeks of the year to earn $50k a year and still get taxed, but it isn't worth it for a spec home.
I think its a fantastic return in a short amount of time using mostly borrowed money.
Remember tax is a good thing, it means you are actually making money. Think of what doing 2,3 or 4 of these homes at a time equals $$$$$. We are doing 4 at the moment and we have doubles our expected return. We have bought land retail and only got a $1500 discount on each house from the builder. So it is ver doable, all on a 95% lend.
I'm glad that you have that opinion, just less comepetition and more money to make for me.
People go to work 5 days a week for 48 weeks of the year to earn $50k a year and still get taxed, but it isn't worth it for a spec home.
I think its a fantastic return in a short amount of time using mostly borrowed money.
Remember tax is a good thing, it means you are actually making money. Think of what doing 2,3 or 4 of these homes at a time equals $$$$$. We are doing 4 at the moment and we have doubles our expected return. We have bought land retail and only got a $1500 discount on each house from the builder. So it is ver doable, all on a 95% lend.
Barney, can I ask about the transportable - where did you purchase, how much and what kind of site you are putting it on? Looking at doing one of these and curious to hear from others who have experience.
