Buying land. Any caveats?

[defecta]

Hi guys,

This might sound like a stupid question but will banks lend to buy land?

I have seen some land that I like and I have enough of a deposit to make up 30% if I have to so.

Its about 2.5 hours from melbourne if that matters too.

Also is there anything to be wary of when buying land? Like conditions that require you to build within a certain time frame, getting facilities connected etc?

Cheers.

 

[Aaron_C]

Lenders do lend on vacant land but the LVR drops significantly.

 

[defecta]

Hey Aaron,

Does the LVR depend on the land and where its located? Can you me an indication on what a common LVR for land is?

 

[Aaron_C]

Yeah it all depends...hard to give you a figure unless you tell me where it is/how big it is/zoning etc.

But if you're going to buy the vacant land + build on it then it's a different story...

 

[defecta]

the land is in the South Gippsland Shire. Does that help?

And its just shy of 700sqm

 

[Aaron_C]

That's quite different to what you were looking to buy before! This may be hard to get LMI for so you'll need a bigger deposit for sure.

 

[defecta]

yeah i know. I just think its a good opportunity.

it probably makes little financial sense to buy land down that way I know but I just like the clean slate and potential of a vacant block of land that I can do whatever I want with.

And I figure I can afford to wear the holding cost with the expectation of capital growth in the years to come.

There is house and land at pretty attractive prices to in the area too so that might be a better investment.

I have zero evidence to support my forecast but its sure to see some growth at the current prices and the location its in.

What about 20-30% for vacant land?

 

[Doovalacky]

Covenants.
Locations of services. ie sewerage easements that stop you building anything on part of the block.

Council rates.
Council requirements for empty blocks, ie low level slash and removal of waste each October.