Pros/Cons of buying land package and building for investment?

[pipsal]

Are there any particular pros/cons to buying house and land packages, or buying land through the developers and building one of their homes as an investment property?

I notice that a lot of new units tend to be a bit price-inflated, is this the same with new house/land builds?

Are there any issues with getting 95% loans/valuations for house and land (or land with a build contract)?

 

[D.T.]

Pros
Heaps of depreciation
New so very low maintenance / repairs required
Can usually attract a better quality tenant

Cons
Have to wait time for it to complete
Interest costs prior to completed - have to pay prior to collecting any rent

Homework
Check the reliability and quality of the builder
Check what established homes in the area are worth and ensure you can build for less than that
Check what newly built homes in the area rent for to ensure youre happy with the yield

 

[rroodd]

Going through that exact process right now actually... at the Sunshine Coast

Land settles this coming weekend, and house completed (hopefully...!) by Christmas.

Have done as much homework as I can regarding the 'house and land package' thing for new estates, and I ended up just finding an 'on-sell' vacant block from an earlier release of this particular estate.
The advantage of this, was that it was already registered with the local council, thus shaving heaps of wait time of the process.

I also got the build process started even before the land has settled, to also minimize wait times. ( plans underway, HIA contracts prepared). May sound a bit risky to some, but I was confident of the block going through ok.

As long as you factor in the interest payments on the land during the build, and also the house loan payments in each of the progress stages, you know what to expect.

The other advantage of buying the land separately first, is that you're only paying the stamp duty on it, and not the total of the house + land.