Hi I'm new to this site, and new to the idea of buying property as well. I've seen a really cheap piece of land, in a tiny town, that I could actually afford. (I'm a single mother to a young child) My idea was to buy it and hold onto it for a few years, maybe then I could afford somewhere that I would want to live. The land is priced lower than other land in the area. I literally would not be able to afford much else, so I guess I'm wondering if its better to own 'something' than nothing? Thanks
There is no income or tax advantages from raw land.
The holding costs are all directly out of your pocket.
You would be better off to buy a similarly priced block (or slightly more expensive) with an older house on it, which may be needing a bit of a spruce up, which you could do much of yourself if you have the inclination, and then rent it out and get the tax breaks for.
That way, you will minimise your holding costs a fair bit.
If the house is built after 1987, the tax breaks are even better as you can depreciate the entire building, fixtures and fittings.
If you can only affors the land, and can handle the repayments, then do that.
Finance for property in smaller towns can be harder, so talk to one of the excellent Mortgage Brokers here on this site for more advice.
Be careful about buying the cheapie in the tiny town. I am not saying it wont work, I have done that and it has worked, but that is in the past. I would investigate what the town has to offer and with the market quieting down, work out what you expect the land would sell for in a few years. I know there are no crystal balls, but for arguments sake, work of say 7 or 8% capital growth per annum and factor in interest, rates, block maintenance (you will still need to keep it clean) and see where you would end up in say 5 years. Dont forget to also add in buying and selling costs and stamp duty. If the number at the end of the page dissappoints you, then you will have your answer. My concern is that off a low base, any percent rise in capital growth will be small return after all costs, and it may not be worth the stress for your first purchase.
On the other hand, are you able to do as LA Aussie suggests and take advantage of all the current $$$ available to FHO?
I wish you well and dont get swept along with the tide of "must buy something". I dont doubt that there are many many persons who whish the had not done so.
i am going to go the other way. If you can afford it and its all you can afford, then anything IS better than nothing. After all, unless you lock the money away and dont touch it, this is enforced savings and it will help your credit history when you do want a loan. But do your sums first!!
hmm, I personally wouldn't buy the block of land as you make no income from it. It's great that you want to start somewhere though ,what is your budget? if you tell us, we might be able to think of something?
Hi I'm new to this site, and new to the idea of buying property as well. I've seen a really cheap piece of land, in a tiny town, that I could actually afford. (I'm a single mother to a young child) My idea was to buy it and hold onto it for a few years, maybe then I could afford somewhere that I would want to live. The land is priced lower than other land in the area. I literally would not be able to afford much else, so I guess I'm wondering if its better to own 'something' than nothing?
If you receive any Centrelink benefits you may want to find out if buying a block is going to affect your benefits in any way. I know that in WA if you own a piece of land you are not eligible for state housing accommodation. You'll also be up for land tax, rates and whatever else you have to pay in your state for the joy of owning a block of land. Under normal circumstance with cheap blocks of land you may find that the holding costs are higher then any capital gains you may stand to make. I'd also go with what LA said and look at saving a bit more if you have to do so and go for a cheap house instead of the cheap land.
Thanks everyone, the land is actually in N.Z, and costs almost nothing (under $10, 000), so repayments, etc are not a problem. I was just thinking, that unless its a toxic waste site, how can I lose- even if I couldn't sell it- or sold it for less than I paid, it wouldn't be a big deal, and if I made a profit, then even better. I'm pretty unlikely to get any kind of loan at the moment for a house I think, so this seemed like it might be an option.
firstly, my very best to you. without being in the least bit patronising as i know from experience; well done because you are thinking of doing SOMETHING!. heaps of people just talk about it and use excuses not to. i have been single for 13 years with 4 teenagers. my net worth is pretty good now though.
firstly the concept of buying some kind of property is really sound as it means enforced savings. when the dosh is as tight as it is for single parents, there is never any left for 'saving'. (wait till they want size 12 nike's!). however, if you have a mortgage you will find the cash to pay for it where you may never be able to save otherwise. i'm really good at budgeting and i never would have been able to save 1000's. if you don't have that enforced saving regime, in five years time you will be no better off than you are now.
onto your issue. land on it's own will just cost you money unless you have an ultimate goal in mind to use it for. would you be able to shift a house onto it or put a small kit home on it? worth doing the costings on. are there properties available now for that sort of money (ie the cost of the land plus some sort of habitable dwelling). if so, always go for something which pays all the bills and there are places here now in victoria which are cash flow positive. alternatively, if you live in it and gradually do it up, you'll be saving and adding value; ie actively working towards a better future. i used to buy a can of paint or some tiles or something whenever i could glean a bit off the top of the grocery bill. mind you, my entire pantry was colour co-ordinated; all black and white!
as to land tax etc, i don't think it's payable in nz and it doesn't kick in until you own a lot more than your suggested block. about your borrowing; it's worth asking around whether you can actually borrow as you used to be able to borrow even on centrelink benefits as it is deemed a steady income unless your child is nearly 16 . so if your income is low doesn't mean an automatic disqualification from borrowing.