Hi Everyone,
We are currently in hiatus at the moment waiting to build our PPOR. That said, I'm already thinking about my next project once the build is complete.
I have the following options in mind with a budget of around $400 - $450k:
Option 1: We have a current investment property which is getting past it's used by date. It will need quite a bit of renovations in the coming years. My thought is we can tear it down and build two side by side on the block. We've looked at putting one on the back, but the block is too small for that given site of the current house. Estimate of the current house is $430K. Two new 3/1/1 would be around $480K - $500K each (conservative).
Option 2: Buy another property worth the $400 K.
The downside to option 1 is the holding costs and the lost of rent during the build phase plus any cost overruns during the build. This may eat into any of the profits we expect to gain. Although saying that, we are planning to hold the two units. The property is currently neutral geared. The two units will make it slightly positive, after taking into account depreciation. The risk in developing is also weighing on my mind, making sure we have enough capital to complete the build. Option 2 is definitely the less risky, and more tried and tested option.
Anyway, wanted to get some other views. Which way would you go and why?
We are currently in hiatus at the moment waiting to build our PPOR. That said, I'm already thinking about my next project once the build is complete.
I have the following options in mind with a budget of around $400 - $450k:
Option 1: We have a current investment property which is getting past it's used by date. It will need quite a bit of renovations in the coming years. My thought is we can tear it down and build two side by side on the block. We've looked at putting one on the back, but the block is too small for that given site of the current house. Estimate of the current house is $430K. Two new 3/1/1 would be around $480K - $500K each (conservative).
Option 2: Buy another property worth the $400 K.
The downside to option 1 is the holding costs and the lost of rent during the build phase plus any cost overruns during the build. This may eat into any of the profits we expect to gain. Although saying that, we are planning to hold the two units. The property is currently neutral geared. The two units will make it slightly positive, after taking into account depreciation. The risk in developing is also weighing on my mind, making sure we have enough capital to complete the build. Option 2 is definitely the less risky, and more tried and tested option.
Anyway, wanted to get some other views. Which way would you go and why?