Display Home

Discussion in 'Caveat Emptor (Buyer Beware)' started by Longrass, 7th Nov, 2014.

  1. Longrass

    Longrass Member

    Joined:
    10th Jun, 2013
    Messages:
    61
    Location:
    Darwin, NT
    This could be of interest here possibly?

    In Darwin, suburb of Durack (in the new "The Heights Durack").

    Private sale, 4 Bedroom, 2 Bathroom, Double Lockup Garage, Pool, Fencing, Etc. In the Display Village of the estate which will be used for 2 years, after this, will be private housing. Arguably the best builder in the area.

    2 Year Lease, Rent is $1200 per week.

    $914,000.00 if anyone is interested.
     
  2. D.T.

    D.T. Property Lookerafterer

    Joined:
    4th Feb, 2003
    Messages:
    7,181
    Media:
    6
    Location:
    Perth & Adelaide
    Display homes are awful things to buy.
     
  3. boeman

    boeman Member

    Joined:
    11th Oct, 2013
    Messages:
    470
    Location:
    Perth
    Perth Telethon home is often a good one to get in on.

    A few years back I was involved in building a couple of them. One in Two Rocks sold for $560k (from memory) for a corner block 2 storey with ocean views, built to a high spec. A few of our sales reps actually rocked up trying to bid for it.
     
  4. Longrass

    Longrass Member

    Joined:
    10th Jun, 2013
    Messages:
    61
    Location:
    Darwin, NT
    Why do you say that?

    When they are handed back, the builder repairs anything damanged, has the tiles polished and everywhere repainted.

    The way they structure them in Darwin is to build them "in" a new suburb, not as a standalone display village...
     
  5. pinkboy

    pinkboy SS Lookerafterer

    Joined:
    31st Jul, 2011
    Messages:
    2,555
    Location:
    Mackay, Queensland
    Also hard to insure as they are not 'occupied'.


    pinkboy
     
  6. Scott No Mates

    Scott No Mates ...and people wonder why?

    Joined:
    25th Jun, 2011
    Messages:
    5,391
    Media:
    144
    Location:
    Sydney - LNS
    That's a consideration PB but it is 'occupied' as it is under lease and used on a daily basis. Just because no one sleeps there doesn't mean that the place is unoccupied.
     
  7. pinkboy

    pinkboy SS Lookerafterer

    Joined:
    31st Jul, 2011
    Messages:
    2,555
    Location:
    Mackay, Queensland
    You tried to insure one?

    pinkboy
     
  8. Scott No Mates

    Scott No Mates ...and people wonder why?

    Joined:
    25th Jun, 2011
    Messages:
    5,391
    Media:
    144
    Location:
    Sydney - LNS
    Resounding silence.
     
  9. D.T.

    D.T. Property Lookerafterer

    Joined:
    4th Feb, 2003
    Messages:
    7,181
    Media:
    6
    Location:
    Perth & Adelaide
    Right...

    But the lease is to a builder, therefore commercial. So commercial loan, commercial insurance, commercial rules. Eek.
     
  10. pinkboy

    pinkboy SS Lookerafterer

    Joined:
    31st Jul, 2011
    Messages:
    2,555
    Location:
    Mackay, Queensland
    I see what you did there.............



    Ok. It can be done, sure, but insurers dont like em, and risk fee is higher than normal - correct?


    pinkboy
     
  11. Rolf Latham

    Rolf Latham Member

    Joined:
    2nd Mar, 2001
    Messages:
    18,791
    Location:
    Confused = Sydney, Brisbane and Gold Coast
    finance can be an issue as well, but we do a few of them

    ta

    rolf
     
  12. Corey Batt

    Corey Batt Finance Broker

    Joined:
    6th Apr, 2010
    Messages:
    3,209
    Location:
    Adelaide, South Australia
    As Rolf has said. Finance can be a bit more limiting + many insurers are NOT a fan.

    Outside of that usually the price is a small premium and rent overinflated, so after the lease ends and goes onto the normal market the yield goes SPLAT.
     
  13. Longrass

    Longrass Member

    Joined:
    10th Jun, 2013
    Messages:
    61
    Location:
    Darwin, NT
    Rent in this instance is around $50-$100 per week above market rate, so a small bonus
     
  14. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

    Joined:
    2nd Jul, 2013
    Messages:
    2,778
    Location:
    Sydney
    That's better - Short duration. In Eastern states very different.
    - You cant claim the GST under GSTR 2012/5 (used to be able to)
    - Commercial rent (GST maybe ??)
    - Bank lending concerns...Not resi loan.
    - Insurance issues
    - IF the builder is a going concern...If the builder goes belly up you lose a tenant and CANNOT obtain another one until the centre closes. This affected a client of mine when a major NSW builder folded a few yrs ago. The new owner didnt have a lease with him and there was no obligation to do so. He had no interest since he wanted to build his plans not the former builders. Lucky the site owner allowed the street of that builders homes to be closed and used for resi renters. Took almost 8 months as council had to rezone. Meanwhile zero income.
    - Often massive conditions apply to "Homeworld" sites. You are stuck with an inhabitable home until the site closes. Its like having a market for rental with one potential user. Usually 3-5 years.
    - Some buyers get around issue by seeking a bank guarantee from builder but some builders refuse.
     
  15. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

    Joined:
    2nd Jul, 2013
    Messages:
    2,778
    Location:
    Sydney
    Display Homes in a SMSF can sound appealing with higher yields etc. However banks wont lend it (or wouldn't). There is a major concern that the same asset wont be available. Many contracts allow the builder to modify the premises and many do...They can change the fa?ade, garage, alfresco room etc. Some allow them to demo and replace like for like ie 4BR + 2 Car Gar.

    The furniture that's included poses a single acquirable asset concern too - Gadens opinion when client applied. However I believe that's a stretch. Its like saying you cant buy a unit with a split AC as its two assets.