Was having a think last night,
Ive been looking at development sites, and its pretty hard in the areas ive been looking at.
then I got thinking, why do developments? other then for something different
I can find renovation projects that return 25% (buy $200k, spend $20k inc stampduty, sell for $270k for $50k profit)
a development can say return 20-30%, while at the smaller development end even 20% is hard to achieve
RENOS
Pros/Cons
+Short time frame
+Dont need as much cash
+Great Yield if I dont refinance
+Greater scope of CG (Assuming I dont sell)
+Option of Instant cash (if I sell)
- Decreasing cash reserves if I hold
- Cashflow negative if I refinance at the updated price
- Increased need for buffer with increasing property numbers
DEVELOPMENTS
Pros/Cons
+Get Cash assuming I sell
+ Huge Depreciation
+ GST benefits if I dont sell
- Long timeframe
- Final product has less likely for CG chance due to being new, and unable to value add
- Need bigger cash reserves
What would others in my situation do and why?
I ask Somersoft members with their infinite wisdom
Thanks everyone
Ive been looking at development sites, and its pretty hard in the areas ive been looking at.
then I got thinking, why do developments? other then for something different
I can find renovation projects that return 25% (buy $200k, spend $20k inc stampduty, sell for $270k for $50k profit)
a development can say return 20-30%, while at the smaller development end even 20% is hard to achieve
RENOS
Pros/Cons
+Short time frame
+Dont need as much cash
+Great Yield if I dont refinance
+Greater scope of CG (Assuming I dont sell)
+Option of Instant cash (if I sell)
- Decreasing cash reserves if I hold
- Cashflow negative if I refinance at the updated price
- Increased need for buffer with increasing property numbers
DEVELOPMENTS
Pros/Cons
+Get Cash assuming I sell
+ Huge Depreciation
+ GST benefits if I dont sell
- Long timeframe
- Final product has less likely for CG chance due to being new, and unable to value add
- Need bigger cash reserves
What would others in my situation do and why?
I ask Somersoft members with their infinite wisdom
Thanks everyone