All Topics / Help Needed! / Build/buy/develop? Help!

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  • Profile photo of BrodavoBrodavo
    Join Date: 2013
    Post Count: 1

    Hi everyone I am new here :) my husband and I have found ourselves in a position to really help set ourselves up, but we are not sure which option is best.

    We are given a free house due to his job, so we rent out our previous home for $370 wk (which we don’t intend on returning to). We have since purchased our future home for a steal of 560k, bank valued at 720k (4×2 on 2.5 acres in Yallingup WA) which we also rent out fr $450 wk.

    We also recently inherited $100k which we have placed in the offset account of our lowest mortgage. We keep the biggest mortgage high so we get max tax benefits as this his solely in his name and I am a stay at home mum.

    Is it best to build with the intention of selling in a few years, buy an established bargain, or maybe develop some units? Our goal is to be mortgage free with our intended home in Yallingup in about 4 years, when we leave Dampier( and therefore the free house). Positive cash-flow from investments by that time would be a bonus!

    Many thanks from a clueless newbie xx

    Profile photo of TheFinanceShopTheFinanceShop
    Join Date: 2012
    Post Count: 1,271

    It doesn't sound like you are a newbie or clueless. Developing is usually the better way of building equity but you need to ultimately do the numbers. Have you constructed before? Have you built multiple dwellings at the same time?



    TheFinanceShop | Elite Property Finance
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    Profile photo of EmilEmil
    Join Date: 2012
    Post Count: 26


    Congrats on your investing strategy. It would be great if all beginners had your luck and expertise.

    To answer your question, I believe that developing a few units is the best choice. Don’t stress over negative gearing during the first years, as these property investments offer huge benefits on the long run.



    Sunbuild Invest

    Profile photo of DerekDerek
    Join Date: 2004
    Post Count: 3,544

    Hi Brodavo,

    While you may have landed on your feet so far – the landing has the potential to set yourself up quite well from here onwards. The key will be for you to take action.

    For mine I would be looking at development options in Perth and keeping things fairly simple. Being so far from the site of your work you will need to consider how you will manage the development process. Buying and developing in a rising market such as the one we are currently seeing in Perth maybe another stroke of good fortune for yourselves. 

    As the project proceeds you can then look at the numbers to see which strategy (or part thereof) suits you at the time. Maybe a combination of partial sell down to reduce debt levels and/or increase cashflow with a build and hold strategy would position you well moving forward from here.

    PS – No doubt the fishing boat gets a work out in Dampier.

    Profile photo of
    Join Date: 2012
    Post Count: 2

    Hi Brodavo,

    You find yourself in a very fortunate position. Well done for the good buying decisions you both have made! 

    If you develop, council approval etc…tends to take a few months depending on location, building will probably take another year to year and a half depending on what you are doing.

    I always say property investment is a long-term strategy. 

    However, if the numbers stacked up for a development project i.e. a few townhouses or units then you could create some decent equity reserves. 

    Make sure its in an area with good demand for when you want to sell them and rent them out.

    Potentially think about selling them 'off the plan' before construction to reduce your risk if you want to sell a few.

    If you are after positive cash flow, potentially think about keeping one or two of these developed townhouses or units if the numbers stack up.

    All the best.

    37 Property Group

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