Buying land for investment

I am thinking of buying a piece of land in some rural areas and then leave it until the market price grew and then sell it to make capital gain.
Can anyone share the list of things that I need to pay attention to?

I read in another thread that i need to pay attention to the land zoning. But apart from that, what else that i need to worry?
Is there an ongoing fees for owning a land? such as council fees?
Do i need to maintain the land, like grass cutting, etc, etc or I can just leave it as it is for years?
Is it better to built a property on the land then sell it or just sell the land?
any tips or input on pitfalls to avoid would be highly appreciated.

thanks.

I'm no expert but  im my experience you will need to pay council rates, depending on  what services the land has, ie sewer, town water  etc...if it isn't a huge block and it has neighbours you will need to have the grass cut-  you may have to anyway as long grass is a fire hazard.
My inclination would be to  build on it if it is in  a reasonably populated area to get a rental return.  The only time i wouldn't is in a particularly low Socioeconomic area where you wouldn't want to rent it out now but believe it will go up in hte future (eg if it right on the water).

Whilst you hold the property without income, it is not an investment yet you have to pay your rates, land tax, water/sewer charges. You will also need to pay levies to the rural fire service, undertake such measures as required to prevent the spread of noxious weeds on your land (eg pattersons curse), insurance (public liability in case someone trespasses and injures themselves) and the list goes on. The property costs, unless it is income producing are generally not tax deductible.

Buy, build and rent it out. Better yet buy in a few of the country towns where there is rental demand.

Hi Scott and Jessy,

thanks for your inputs.
It seems a lot of hassle (and money to spent) if I bought a land and just leave it at that.

Any suggestion on the suburbs to buy cheap land and then built?
maybe a builder recommendation?

Any particular state, city or pricetag?

Hi scott,

I am thinking lithgow in nsw with probably around 200k.
Does this sound reasonable?

Dont forget capital gains, if you dont build and sell when it isn't your primary residence this how it works:

Now the way capital gains work s on land in victoria is 235k sale price  - 162k = 73k gain
so 50% of that 73 is yours 36,500 is yours tax free
the other 36,500 gets added on to your taxable income so depnding on what bracket you fall in determines the result. in my case 30% went to the taxman so just over $10k was lost to Mr Rudd's mates in capital gains, you'd think stamp duty we pay of $5k was enough

Milt

FYI CGT is a Federal Tax and does not vary from State to State.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

I live in Chicago and already have bought a couple preconstruction condos as an investment. I have seen some land/lots for sale for what ... you put it up for sale? Flipping land is sorta slow and for long term investment Now if you are purchasing...predictable, and you can plan more. I like to buy lots where I can build multiple

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If you are buying land and not developing as they have said it does not produce income so any costs of purchase and maintenance, land tax, rates, insruance and interest if bought with debt has to be capitalised - added to the purchase price to offset the sale value when sold - it cannot be offset against your other income.

There may be one way but it would mean making a business out of buying and selling land - but this is technical and many things to consider like GST etc.

Any investments that you do not repa income out of along the way are much higher risk - ask the owners of Enron and Worldcom shares when they went bust - never received any dividends fro having money invested for years then the companies went bust and no money returned to shareholders.  Property can be the same - if the area doesn't increase in value you have worn a lot of opportunity cost of not having the funds invested elsewhere.

I wouldn't be doing it as your sole investment - maybe as part of a larger investment portfolio.

Yours in wealth and lifestyle!

Damian Ebzery B.Bus M.Bus AFPA ASA
empire@lips.net.au
www.empirewealthdynamics.blogspot.com
www.lips.net.au

Any comments made of for the purpose of general discussion - these are not to be considered general or personal advice.