Buying HL packages as a strategy for retirement

[TMNT]

Not particularly an innoivative technique

but was reading one of hte magazines recentyl

and it had some fairly young lady (good on her for giving it a go)

in her mid 20s, buy 4 House and land packages, most in point cook,

she bought some in 09 which was good timing wise as the area did grow significantly during this time, but did fairly crap after

she has gone and bought 10 in total (not sure if the 6 subsequent were HL packages)

but regardless ,to me, buying standard HL packages is a recipe for disaster unless, you buy in absolute Whoop whoop and you get lucky of the area building up,

she boguht her first one in 09, its been 5 years since, and she intends to retire in 5 years. just seems highly unlikely unless she got really lucky or if subsequent purhcases werent HL packages

whats everyones take

 

[Paul@PFI]

Spruiker ?? A magazine that accidentally stumbled across this investor. It sounds like many seminar spruikers and their get rich story. Find me a lender who will lend all-in on four H&L in same street / suburb to a 20 yo without a high income or other assets.

 

[MTR]

Not particularly an innoivative technique

but was reading one of hte magazines recentyl

and it had some fairly young lady (good on her for giving it a go)

in her mid 20s, buy 4 House and land packages, most in point cook,

she bought some in 09 which was good timing wise as the area did grow significantly during this time, but did fairly crap after

she has gone and bought 10 in total (not sure if the 6 subsequent were HL packages)

but regardless ,to me, buying standard HL packages is a recipe for disaster unless, you buy in absolute Whoop whoop and you get lucky of the area building up,

she boguht her first one in 09, its been 5 years since, and she intends to retire in 5 years. just seems highly unlikely unless she got really lucky or if subsequent purhcases werent HL packages

whats everyones take

Land and house packages work when its a rising market and there is shortage of land.

However, the most effective way is to source the land yourself and then shop the build/house with various builders. If you buy land and house packages as a product that a spec builder is marketing you will be paying too much.

The down side to this is unless you have the funds to build at least 2 to 4 pa I would not be bothered because it takes 12 months to build and you have so much cash tied up and in a rising market you can make money with much less effort and most importantly in a shorter time frame.

MTR

 

[redwing]

Land and house packages work when its a rising market and there is shortage of land.

However, the most effective way is to source the land yourself and then shop the build/house with various builders. If you buy land and house packages as a product that a spec builder is marketing you will be paying too much.

The down side to this is unless you have the funds to build at least 2 to 4 pa I would not be bothered because it takes 12 months to build and you have so much cash tied up and in a rising market you can make money with much less effort and most importantly in a shorter time frame.

MTR

There was a poster here (Sue?) several years ago who was doing such deals with success as MTR says by sourcing the land and then building the house with various builders

 

[MTR]

I remember Sue she was doing this in QLD ?

I was doing this in the last Perth boom cycle 2001-2006, its a good strategy as long as you do not hold too many/ turn over stock, because you are generally building in outer suburbs where there is plenty of land. When the market turns the values can drop significantly.

 

[TMNT]

my take is that unless you have purhcased the land a long time ago or in serious bulk, for the average buy and hold investor, its not a very smart way to go abouts with it, you might as well buy a larger block of land with an old house (if avaiaible)

you ahve your funds tied up for 12 months, probably wont get bulk discount for building one dwelling

to me its just not the way to go for anyone unless you get lucky,

 

[redwing]

I remember Sue she was doing this in QLD ?

That's the one, I think she was doing one or two a year

 

[MTR]

my take is that unless you have purhcased the land a long time ago or in serious bulk, for the average buy and hold investor, its not a very smart way to go abouts with it, you might as well buy a larger block of land with an old house (if avaiaible)

you ahve your funds tied up for 12 months, probably wont get bulk discount for building one dwelling

to me its just not the way to go for anyone unless you get lucky,

Another option that worked well was just buying the land and flipping it as blocks doubled within a 6 month period and it took 6 months to get the title due to red tape so no holding costs, small deposits. Huge shortage of land and people camping out, this was very unique though, have not seen anything like this since those heady days. Have no idea if this has happened in any other States during boom?

 

[TMNT]

Another option that worked well was just buying the land and flipping it as blocks doubled within a 6 month period and it took 6 months to get the title due to red tape so no holding costs, small deposits. Huge shortage of land and people camping out, this was very unique though, have not seen anything like this since those heady days. Have no idea if this has happened in any other States during boom?

this to me is more of a gamble, unless you could educatedly (sp?) guess that this was going to happen

havent heard of people sleeping out on the news recently, maybe it happens but is not reported

 

[MTR]

this to me is more of a gamble, unless you could educatedly (sp?) guess that this was going to happen

This is no different to what investors do today, I don't call it gambling.

 

[TMNT]

This is no different to what investors do today, I don't call it gambling.

well yes, true, everything is a gamble,

 

[tobe]

If it doesnt have a yeild its closer to gambling in my books. Its a bit harder these days to flip before settlement. In victoria if the 'onsell' price is diferent form the original price a second set of stamp duty is payable.

 

[MTR]

But you have 2 choices - you can flip the land and make money in a shorter timeframe or build. We were not settling on the land until the titles were issues - 6-9 months, demand pushing prices up and no holding fees.

This strategy works in a booming market but then again you can sit on your hands and make money in a booming market, you don't need to build just throw a dart at any area

 

[blackenator]

I didnt purchase a house and land package but I did get a block of land in Sydney apart of a release from stockland about a year ago and construction is due to finish this week. I paid about 480ish all up and could probably sell it for about 600- 650k as other houses similar specs to mine have been selling at this price.

I had intrests in another developer in another area of Sydney but didn't have the funds to get another block in that estate. The same thing tho prices started to sky rocket after the 1st release. I am waiting for another 2 releases next year and hoping to do the same again but I guess we will see what happens.

 

[SUNNYBILL]

My strategy is always buy land in the first release of a development. Titles are always about 5 months away giving plenty of time to visit builders and negotiate the best price and inclusions. When property is built I look at market and decide whether to hold or sell. Smallest net profit (after all costs including tax) has been $45,000 largest has been $173,000. Properties kept as rentals all have had great capital growth and are positive after tax. No maintenance. It's a simple strategy, but has worked for me.

 

[MTR]

Sunny
that is a very good strategy, when I was doing this I also found getting into stage 1 or very early stages of the development was key, because with every additional land release the stages just got more expensive.

I think the last 2 years in Perth was OK as market was rising, now perhaps it will be a different story and this strategy may not work too well as the demand has slowed down.

Are you watching this, am I correct??? as I am not looking at this closely

thanks
MTR

 

[SUNNYBILL]

Yes MTR I think things have changed and you have to pick the correct developments now to make the gains. At this stage of the cycle I always like Satterley's Estates as they price the first release very keenly (for the purchaser), and put infrastructure in very quickly so by the time the house is finished there are beautiful parks etc already in place. Just what purchasers/renters are looking for.

 

[MTR]

sounds good.
another option is look at government releases they are always in demand as priced keenly and well located. Landcorp, some project with JV partners.