Views on over capitalising

[Green Grass]

Hi all, just deciding on my first IP. I know I want a 4 bed house, 10-15k from CBD location, sub 30 years old and not in need of renovation and therefore capable of being tenanted quickly. Budget is $600k and currently focussing on Brisbane.

I want a decent land component but unsure as to how much. With my requirements, I won't find a 900sqm plot with a new house on, with space for another and in all likelihood, I will be buying on someone else's sub divide.

Given tenants rent bedrooms and not gardens, would I be over capitalising at 600sqm if i don't plan to develop? I am thinking a 500sqm block with 250sqm living space is plenty but I am concerned given the value is in the land that I will be missing out on upside were I to cap my block size at 500sqm.

I would appreciate any views.

Thanks
GG.

 

[Hooray]

Why a 4 bed house? You might have more choices if you chose 3 bed houses?

 

[Green Grass]

Why a 4 bed house? You might have more choices if you chose 3 bed houses?

I have a view that 4 beds allow more flexibility for tenanting given it allows for 2 child families plus guest room or for 3 child families. Suburbs I am looking at are heavily weighted to couples with children rather than single professionals.

I am new to this game so if this assumption is wrong, it would be good to know. Do most investors prefer 3 bed houses?

Thanks.

 

[pickle pickle]

No you are not overcapitalising if you buy a decent size block of land and don't subdivide. You are buying it's potential to subdivide and it is extremly unlikely that councils will change the rules negatively for you on subdivision in the future.

I wouldn't buy brand new though. The argument for less maintenance cost on a new building compared to a well built and maintained older building isn't what I have experienced.

 

[Green Grass]

No you are not overcapitalising if you buy a decent size block of land and don't subdivide. You are buying it's potential to subdivide and it is extremly unlikely that councils will change the rules negatively for you on subdivision in the future.

I wouldn't buy brand new though. The argument for less maintenance cost on a new building compared to a well built and maintained older building isn't what I have experienced.

Thanks Pickle but what is the minimum size block for subdivision? I would have thought you need much more than 600sqm to benefit from subdivision.

 

[pickle pickle]

It depends on the area. Closer in to the city generally the smaller the block needed for a subdivision. Check with the local council in the area where you are looking to buy.

So in short 600 square metres could be too small to subdivide or a massive plot of land for a subdivision. Check with the council.

 

[Green Grass]

It depends on the area. Closer in to the city generally the smaller the block needed for a subdivision. Check with the local council in the area where you are looking to buy.

So in short 600 square metres could be too small to subdivide or a massive plot of land for a subdivision. Check with the council.

Thanks, I will do.