Would you buy land and a house plan?

[john69_24]

We have four investment properties scattered across this wonderful country and (thanks to the company) we current rent our house for almost nothing.

Well, that is all about to change as we relocate to Melbourne.

Now it gets challenging. What do we do? The rent is not cheap in Melbourne, but we know we are only going to be there for 5 - 10 years maximum. We are thinking of buying and properties we are looking at are around $300K in the suburbs, but nothing really tickles our fancy.

We saw some land for about $130K and we like a house plan that costs $175K (about 30squares).

So, what do we do?

1. Rent somewhere and pay off someone else's place?
2. Buy an established property?
3. Go with this land and house that on the surface cost around $300K? Our biggest fear is - what is this really going to cost us? We are not naive enough to think it will cost $305K, but we don't know what it will cost and have no idea what a ballpark cost might be!

Can anyone give us any assistance or advice?

Thanks,
J

 

[Gordon Gekko]

Hi John,

If you are buying land in Melb for $175k, i am guessing you are buying on the ouskirts of Melb, which in years to come, i don't believe would be a good IP and very low in Capital Growth.

Personally, i would go for option 2, Buy an established property !!

cheers,

GG

 

[john69_24]

Very curious

Thanks GG. Not knowing the area, I am still a little surprised at this!

The locale is just north of the Mornington Penninsula. I would have thought that in years to come property on or near the water here would have a natural push northwards?

I'm curious about your analysis - can you explain why you have that opinion as I would have thought it was actually a good bet (obviously naive here!)

Thanks,
J

 

[Gordon Gekko]

John,

You never mentioned water before. That is a whole different kettle of fish.

But, $175k now sounds too cheap,

GG

 

[john69_24]

Ah, thanks GG. I'll be a little more specific.

We're looking around Carrum Downs. Just back from the water (5 mins or so), about 37kms from Melbourne.

The land was to cost around $130K for < 600 sqm. and $175K for house around 30 squares.

Buying an established home on a block ~600 sqm and about 20 sqs is around $280K. BTW - Rental is around $245 pw.

So...what do you suggest?

J

 

[Gordon Gekko]

Carrum Downs is not considered a "pose" seaside suburb.


I guess it depends on what you want to do with the property when you are finished living in it.

GG

 

[john69_24]

Ah, OK. We know little of Melbourne and at this stage we are operating off a map of the area...we are yet to do our 'reconnaissance' run.

Does that mean it is not just set back off the water?

Our plans would be to rent the place out when we left it, but we would be hoping for decent capital growth in a 5 yr window to allow the purchase of additional property.

Does this area have any appeal or chance for capital growth? If we wanted to live somewhere for about $300K with these parameters (some CG, decent area) close enough to Melbourne to commute (1hr on train), where would you suggest?

J

 

[scouse]

Carrum Downs and neighbouring suburbs do not have a particularly good reputation. That's why the area is cheaper than the suburbs up the road. But it is still near the beach and things might change given the proximity to the beach.

 

[Garry K]

Hi John

I'm in Melbourne and my brother lives in Carrum Downs. He takes the train each day into the City to work - so do plenty of others.
It is not "an attractive Bayside suburb" - fairly old buildings, not much in the way of shops.

However, just down the road a bit, 1 km inland, is Patterson Lakes, which is a newish canal type development ala Gold Coast, which feeds into the bay via Patterson River. Much more expensive there. So, you might get some overflow development happening - probably what is being offered to you.

You deal sounds okay.


FYI - we have 5 IP's and rent, because we can rent the house we live in a lot cheaper than if we had to buy similar in same area.


GarryK

 

[john69_24]

Thanks

Thanks for all your help people. Looks like we'll end up in Skye right next door in an established home, rather than building.

Enjoy your investing!

J

 

[chrispy]

Skye

From memory I thought Skye was a large housing commission area.

I have not been there for a while but I thought that the prices were held down by the commission housing in the area.

Have you looked at Chelsea - it always seem to represent good value for money, closer to town and the prices seem to be reasonable - I am on the other side of town so am not familiar with the area but it always seems to represent good value for money.

Chris