House and land packages offer investors a relatively straightforward approach to building a portfolio. But is it the right approach for you?
Blogger: Phillip Tarrant, Smart Property Investment
For every property investor there are many possible investment strategies.
While the key fundamentals of smart property investment are the same – due diligence, price, type of property and, of course, location – everyone seems to have their own personal take on how to invest successfully.
One strategy is the purchase of a house and land package.
As the editor of Smart Property Investment, I talk constantly to the leading minds in property investment about the most effective ways in which to make a dollar in today’s market.
I have come face to face with many experts who swear by the benefits of the house and land package; others warn of the dangers of this approach.
But if you are looking to ease yourself into the world of property development, then a house and land package might just be right for you.
This strategy allows you to step into the development arena without the stress of building your own home. A developer will take care of nearly everything for you, from dealing with the architect to wrangling in the builders.
One of the best aspects of the house and land approach is the amount of control you have. From the kitchen bench tops and floor, all the way up to the brick colouring and landscaping, the choice is yours.
The availability and range of such choices, however, will depend upon the various options provided by the developer – and by your budget.
Speaking of your budget, how many times have you heard of the dreaded ‘budget blowout’ when building a new home? This is an all-too-frequent occurrence for owner-builders who struggle to stay within their initial budgetary limits.
A house and land package will commonly carry a ‘fixed’ price, giving you peace of mind by ensuring you only pay what you sign for.
When dealing with a fixed price, however, it is important you are 100 per cent aware of what you are actually paying for.
Investors frequently pay a little more for those essential extras such as curtains or blinds, so be sure to do your research and read the contract carefully prior to signing.
Just because a house and land package can offer a hassle-free transition into the development world doesn’t mean the fundamentals of property investment can be thrown out the window.
Due diligence is crucial – just as it is with selecting a property, its location and so on.
First and foremost, you will need to ensure you are dealing with a trusted and experienced developer. Visit some display homes or existing properties to view their handiwork to confirm they are not simply taking you for a ride.
Second, research the common costs of building materials and labour expenses to ensure you are actually getting what you paid for.
Finally, calculate the average growth of the area to ensure you can turn a profit on what you are planning to spend.
When building a home for investment purposes, you must also remember to consider the local area.
Does your property allow for easy access to transport, schools, shops and medical centres? Who makes up the local demographic and is the area likely to see future growth and development?
These factors will still affect the success of your investment.
And always remember: whether it’s house and land or some other strategy, the fundamentals of smart property investment remain the same.
About Phillip Tarrant
Phillip is a media professional as well as an active property investor. He has over 10 years’ experience reporting on the mortgage and property markets and has worked extensively with Australia’s leading mortgage lenders and brokers as a corporate communications and public relations consultant. As a property investor Phillip advocates the principals of research, due diligence and surrounding yourself with the right team to make informed and educated property investment decisions. As well as being editor of Smart Property Investment, Phillip sits on the Board of the Property Investment Professionals of Australia (PIPA), the peak industry body for the property investment industry. He also sits on the Board of Publishers Australia, which represents best practice, innovation and professionalism in publishing. These two positions offer Phillip insights and awareness to the latest issues, activities, techniques and best practice principals across both industry sectors and ensure Smart Property Investment remains focused on delivering quality content to its readers.