All Topics / Help Needed! / vacant land vs house/unit

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  • Profile photo of nickelbennickelben
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    @nickelben
    Join Date: 2005
    Post Count: 32

    i owned a few landed properties but have never invest in any vacant land. As told , land is the element that appreciate in value and not the bricks. Is an investment in vacant land perform better than houses/units ? Any advise please…..any guy shed some lights on this will be highly appreciated .

    Profile photo of yarposyarpos
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    @yarpos
    Join Date: 2004
    Post Count: 247

    truisms re land appreciating and buildings depreciating dont really mean much,  the focus (I think) should be on location.   You really cant have a meaningful conversation about land vs house/unit without the context of specific deals.   In general terms residential land will have holding costs with no compensating revenue,  so the end sale price needs to compensate your holding costs and give you your target profit.

    Profile photo of MisterMister
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    @mister
    Join Date: 2007
    Post Count: 112

    Personally I feel land with somem on it can't be beat compared land only ,  stats show same but – try telling that to multi millionaire farmers around now I guess. I know two myself .
    But something on it does make more sense as rent pays for it , you pay nothing if you buy right and hold it for free – forever . Probably start making money out of it plus  growth.  But land only you have to pay for it and hope it grows too . Fell for that one with my first place – costed me 30k in repayments for 3 yrs .
    Food for thought
    Cheers

    Profile photo of erikkoerikko
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    @erikko
    Join Date: 2008
    Post Count: 12

    if the vacant land supposedly is a field, then you can lease it and as far as im concern, they are getting more value as time goes by compared to unit/house

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    The problem with land is that you do not get any income – so you will be limited in the number of blocks you can get.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    There must be a reason that there is very little virgin earth in the CBD of any city – maybe, just maybe, that there is more to property investment than owning a scarce piece of land surrounded by improved properties.

    The lowest level of risk is possibly owning a vacant site (this also yields the lowest return ie land rent) however when you expose yourself to a higher level of risk, through the development process, you gain both the return on the land as well as a return on the asset. The greater the development potential of the property, the greater the total return.

    Basic development theory declares that if you pay too much for the dirt, the rest of the project is immaterial. So sure, you can invest in a vacant site but if you do, you must always buy it at the right price and have no expectations of a return other than a capital gain at some point in the distant future.

    Profile photo of BanjoSmythBanjoSmyth
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    @banjosmyth
    Join Date: 2007
    Post Count: 44

    Hi guys

    I doubt you will get any tenants who are willing to pay to much rent for a block of land – Unless the own a swag :)

    The lack of income is clearly a huge factor.

    If you are simply a normal everyday investor I don't think you can go past a land/home package. I have heard of some more advanced strategies which basically involves buying land of the plan – eg. buying land very early in a development.  But that is always with the intention of either on selling it or building a home within 1-5 years.

    Cheers Banjo Smyth

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