Hi all
Not sure where this should go so am posting under other
here's our situation
1] PPOR - value 620K (April 2011) - loan 562K - offset account -40K cash
2] IP 1 - Value at purchase (october 2011) 525K - Loan 505K - rent 705 p.w.
3] IP2 - Land value 220K - Loan 203K - House build cost 480K construction due to complete by end of May - loan 450K - expected rent $1000-$1200 p.w.
I have just found another land in an upmarket street in a blue chip suburb
1] asking price 385K+
cost of building (builder + architect )- 350K-400K
The concern here is that as IP 2 is being built here we would be stretching ourself if we buy this right away and start construction ( may even have a $100-$200 neg cash flow)
we can afford to buy the land and wait for six months to start construction in which case we would be paying the mortgage for about 6 months which will add the interest to the base cost on the land value.
bank would lend us 500K now or about 1.2 mil after IP 2 is built and rented
Offset account will grow to about 100K by end of March and 130k by end of july which should take care of the deposits
My ideal scenario is purchase the land with a condition to settle by July 2012.
Put a condition stating that we be allowed to prepare the land for building ( 2 mtrs gentle slope from front to back) and start the Architectural work,DA approval and prepare site.
we are also considering putting in a condition stating that if the vendor backs out after finance then he will be liable for all our expenses with respect to development.
Is there anything we have missed apart from the standard land purchase checks.. soil test, contours etc.
I am worried about the risk of putting in a significant capital before land settlement and hence want to protect myself against the losses if the vendor backs out as 6 months is quite a bit of time.
Are there any other conditions which can be added in to manage the risk?
Not sure where this should go so am posting under other
here's our situation
1] PPOR - value 620K (April 2011) - loan 562K - offset account -40K cash
2] IP 1 - Value at purchase (october 2011) 525K - Loan 505K - rent 705 p.w.
3] IP2 - Land value 220K - Loan 203K - House build cost 480K construction due to complete by end of May - loan 450K - expected rent $1000-$1200 p.w.
I have just found another land in an upmarket street in a blue chip suburb
1] asking price 385K+
cost of building (builder + architect )- 350K-400K
The concern here is that as IP 2 is being built here we would be stretching ourself if we buy this right away and start construction ( may even have a $100-$200 neg cash flow)
we can afford to buy the land and wait for six months to start construction in which case we would be paying the mortgage for about 6 months which will add the interest to the base cost on the land value.
bank would lend us 500K now or about 1.2 mil after IP 2 is built and rented
Offset account will grow to about 100K by end of March and 130k by end of july which should take care of the deposits
My ideal scenario is purchase the land with a condition to settle by July 2012.
Put a condition stating that we be allowed to prepare the land for building ( 2 mtrs gentle slope from front to back) and start the Architectural work,DA approval and prepare site.
we are also considering putting in a condition stating that if the vendor backs out after finance then he will be liable for all our expenses with respect to development.
Is there anything we have missed apart from the standard land purchase checks.. soil test, contours etc.
I am worried about the risk of putting in a significant capital before land settlement and hence want to protect myself against the losses if the vendor backs out as 6 months is quite a bit of time.
Are there any other conditions which can be added in to manage the risk?
