Help Needed regarding block of Land

Hi there, I was wondering if anyone out there had some advice for me, heres my situation .. i am 23 and live in perth, a year ago i wanted to get my foot in the door in the real estate market but couldnt afford to buy a house, so i ended up investing in a block of land, i bought the land for $209 000. I decided about a month ago that i wanted to put it on the market and see wat i could get for it, i spoke to a couple of real estate agents and they all appraised around the same which was between 270-280 grand, i ended up going with an agent that knew the area really well and it went on the market at from $270 , about 4 weeks have passed and the agent hasnt had any offers yet and he rang me to see if we can drop the price abit .. to $260 , so i decided to do some maths and work out wat I have paid for the block and wat costs i have had to pay to keep the block and see wat I am gonna do, i worked out that my costs for the block were as followed :
stamp duty on the land, settlement fees, water rates, council rates, firebreaks, morgage insurance, loan estab fee and of coarse the interest i have been paying on the loan, ive worked out that with my original purchase price of 209 000 plus everything ive had to pay to keep it, i came to the figure of around $237 000 , so if i sell my block for $260 000 which the agent has recommended and take 260 from 237 it comes to 23 000 , then i have to pay the agent fees and capital gain tax on anything i do make, so my question is .. would i be better off keeping this block and looking at building on it in the future?? i know that rent prices in perth r on the way up at the moment .. if i do sell it am i gonna merly just get my money back that i have put into it? i thought id write down my situation and hopefully some out there can give me some advice? it would be much appreciated.. thanks in advance

This advice is worth as much as you paid for it, but if you can get the finance and can hold for 6 months with no rent then I would take a 10 year postion on it and put a house on the block rent it out and keep it for ever or at least through another  cycle.

4 bedroom, 2 bathroom double lock up single storey brick and tile allow $1000 per m2 turnkey including landcsaping although you can get cheaper.  Have a look at his website for cheap builds I wished i had before I signed up my builder

http://www.coralhomes.com.au/design-prices/downloads/BRISBANE.pdf

Noted that these are all esatern states prices

to do the same in Brisbane at about the same land value and assuming that you are on the top tax rate and getting $350 pw rent it will cost you $110 per week to hold with negative gearing.  If you sell you are back to square one again its the land that increases in value not the house.

I know Perth quite well and have worked with Water Corp, Woodside and Clough and my current  company has just bought a tunneling company in Perth I also know that house prices are coming back a bit but I also know that they are predicting rapid population growth in Perth and rental demand will remain high.  Dont worry if it all turns to custard there will be a few people jumping off the narrows bridge before you.

I agree with Bardon,

and further to that post, It wasn't  mentioned about the Depreciation you would get on the new house (maybe it was included in the "$110 per week to hold with negative gearing").

If not; the Depreciation is on the building, and all the fixtures and fittings and is depreciated at you marginal tax rate. You would need to get either receipts for all the construction costs from the builder, or have a Depreciation Schedule complied by a Quantity Surveyor, then give the paprework to your accountant for tax time.

It is well worth it.

Cheers,
Marc.
erardent@hotmail.com

"we get sent lemons; it's up to us to make lemonade"
www.whydoislice.com - for all the golfers out there!

I can see only one of two explanations for the above. Either you were lied to by every single appraiser or the value of your block is currently declining. This might have a bearing on whether you should sell or hold. Which do you believe it is?

F.

In reply to foundation: well i had 3 appraisels done , and yes they were all in the 270-280 grand mark, so it went on the market at from 270 ,  the agent said the biggest problem I am having at the moment is there are bigger blocks in the same suburb for cheaper than mine, but the reason why we valued mind abit higher was it is like 5mins walking distance from a fairly major shopping centre so we thought the location would put the price up and we could achieve 270-280, this hasnt happened so far, the problem in perth at the moment for people like me is their is a heap of house/blocks on the market so it has become a buyers market not a sellers market, the agent said he has been getting calls but people are just not interested in the price. I think what is also happening abit in perth, is house/blocks are taking along time to sell, so people are dropping the price to speed up the time it takes to sell and i think that has happened in the area where my block is, i saw another block in the same area went on the market from 240-260 and within about 3 weeks i saw the same block advertised at 220-240 , shit like that is killing my chance of getting a good price, One question I do have tho .. with agent selling fee's .. if they achieve under what they orginally appraised the block at or what the block orginally went on the market for .. am i able to say to the agent .. look .. maybe take a few grand off the selling fee because we arnt gonna achieve wat u told me we could kinda thing?? if any1 could reply to this msg 2 and give me any advice that would also be great, thanks

yes LA depreciation was already in the projection,.
 
Paul if you let me know what kind of house (cost) likely rent and yor marginal rate I can work out your weekly holding costs for you PM me if you want.

Option 1:Sell, learn, make future informed decision about land prices and deriving no income for such an "expensive" piece of land.
Option 2: Put a house on it, start deriving income, a bit of hassle to build, but probably worth it in the end...
Option 3: Sit still, twiddle your thumb, and make minimal profit...

Good luck!!!!

PS. I'd take Option 2 if I could afford it...

Check out my IP website (Property Investing in Australia), now at:
www.ozpropertyinvesting.com.au

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