Buying Land and Not Building What Happens?

Trying2SaveABuck on 06/09/2018 - 09:25
Last edited 06/09/2018 - 09:56

Hi all,

Just a general question to property investors maybe even lawyers - i've been looking at block of land the past month and most of them have clauses to build within 18-24 months just wondering what happens if you dont meet this guild-line?

Truth is i've had enough of investment properties tenants, agents and insurance but i still want the capital gains benefits of property.

Yes i know property is going down but with population growth in Australia at an all time high the long term benefits of property are still very much promising.

On top of that i like having the option of building a home to live in if plan change

Any advice will help

thanks in advance

Home & Garden

Comments

  • TheBilly on 06/09/2018 - 09:29
    +2

    blokes of land

    probably not a good investment at this point, many of them are facing bankruptcy due to financial stresses of drought

  • Godric on 06/09/2018 - 09:45
    +3

    It's hard to find a decent bloke these days

  • JIMB0 on 06/09/2018 - 09:46

    Squatters will move in on your land.

  • [Deactivated] on 06/09/2018 - 09:48
    +4

    If you don't meet the guild-line they'll most likely remove you as a member and you'll have to start over

  • HighAndDry on 06/09/2018 - 09:51
    +2

    Hahaha you guys are f***king ruthless lol.

    OP: it depends on a case by case basis, on whether the timeframe is just set by the developer, if it's passed on as a requirement of council, or if it's a result of foreign investment approval.

  • Trying2SaveABuck on 06/09/2018 - 09:57

    LMAO im laughing at my own typo

    thanks so if it is the council i should worry if it is just the developer just ignore it - that is advice i've been given in the past

    • HighAndDry on 06/09/2018 - 10:06

      Roughly yes. In this market I can't possibly think why a developer would want to cancel any sale. Though if you're buying land, you have money for a lawyer and should probably talk to one because again - always case by case.

      Oh there are also estates (like body corp but for neighbourhoods of land) like the person below said but I just plain wouldn't buy into those.

  • [Deactivated] on 06/09/2018 - 10:00

    Depends where you buy. In some estates you have to build within two years. Check council rules too.

  • hawkeye on 06/09/2018 - 10:30

    Just send in plans like this http://www.onlygfx.com/wp-content/uploads/2018/01/house-draw…
    It's not your fault they get rejected by council.

    • Domingo on 06/09/2018 - 10:47

      I'm assuming it gets rejected because of the black lines on black background issue? Everything else seems to be in order.

    • airzone on 06/09/2018 - 12:59

      You mean fax it in.

  • ihbh on 06/09/2018 - 10:44
    +1

    most of them have clauses to build within 18-24 months just wondering what happens if you dont meet this guild-line?

    Ask the seller or your lawyer?

    Seriously, this is a form of land banking and is generally a money pit. If there is no capital gain (or even loss), you still incur the acquisition cost and holding cost (interest or opportunity cost, land tax, etc.).

  • follow on 06/09/2018 - 11:30
    +1

    Is that you JD?

    • tomsco on 06/09/2018 - 23:04

      He didn’t mention anything about building a porch.

      • follow on 06/09/2018 - 23:21

        that may be his loophole

  • GangGang on 06/09/2018 - 12:40

    I always thought you had to build in a certain time frame ONCE the builder has started building? Not from when you purchase.

    I may be wrong.

  • Quantumcat on 06/09/2018 - 17:34

    You still have to pay rates and whatnot so unless you're certain it is going to go up a lot I can't see it being worth it.

    • Trying2SaveABuck on 06/09/2018 - 17:48

      If an investment was a certain winner it would be invested in so much that it would became a loser…

      Investing is about is about risk and being educated enough to make a good choices on what will hopefully make money (sure i've been wrong before but thats part of it) the things im confident (NOT CERTAIN)
      - population growth due to high immigration and higher then expected birthing rates in Australia
      - People are living longer thus housing turn over is less common then it was 30 years ago
      - the government discourages housing turn over for down sizers due to penalties to pensions (for excess holding money) and high stamp duty costs

      Im fairly-certain there will be a need for more housing, thus land is a finite resource and will likely continue to increase in value in the long term. - how much it will go up and when i am willing to gamble on….

      • Quantumcat on 06/09/2018 - 20:29

        The risk is higher than with a house. At least if you buy a house, you either get rent, and only lose the difference between the mortgage & upkeep and rent, or you get a place to live. You can wait as long as you like to sell just at the right time, and you'll only ever lose a little (difference of mortgage & expenses minus rent), and that's capped until the mortgage is paid back.

        But with land, you just lose lose lose all the while you hold it. You're forced to sell it before a certain time because otherwise it is just money going continually down the drain (rates will always be there even though you're getting no benefit from holding it). The drain money will slow down once it has been paid off, but how much in rates will you have paid by then? Surely too much. You can only gain if you KNOW the land is going to go up, and quickly (e.g. you find out before anyone else that the local government is going to build a new train station next door in the next couple of years).

        Does this extra risk actually involve getting way more money than if there was a house on it? No, maybe even less (unless you have the right zoning for a large variety of purposes, then you'd get more parties interested than with an existing house).

        This is how I see it:

        Buying a house
        Flip a coin continually. With every flip lose 1 cent. When you get 5 heads in a row, win $20

        Buying land intending to hold it until you'll make a profit by selling
        Flip a coin. With every flip lose 50c. When you get 5 heads in a row, win $25.

        • Trying2SaveABuck on 06/09/2018 - 20:46

          Have you rented out properties before?

          Because dead set you sound like you read that out of a investor book and have no idea what you are talking about. I wouldnt recommend investment properties to ANYONE who isnt a jack of all trades tradesmen because the cost of the up keep is astronomical and dealing with insurance and property managers is even worse!

          If you can fix things yourself it is worth it but if you cant and have to hire electricians, plumbers etc then 300-500 a week in rent isnt worth the 3 k you need to pay a plaster and painter to re-do the hole in the wall or the 1200 to get a roof plumber to fix that leak …. god help you if you tenants are too dumb to use the fan and you end up with mound in the bath room (insurance wont even cover you then) - Now before you say there is insurance GOD HELP YOU and if you tell me 'thats the property managers job' you got no idea ive had a few rentals and a number of property managers and in fairness MOST of the tenants i've had have been 'alright' but literally 1 BAD TENANT on a 12 month lease can undo months or years of hard work…..

          Please note this is for residential properties not commercial

        • Quantumcat on 06/09/2018 - 21:04

          @Pastry: So you think it's better to have no incoming $ at all? If upkeep of a house was greater than rent then nobody would be buying houses and people that did would be knocking them down. And what about all those people with units who manage to have a positive cashflow? If upkeep cost more than rent, do you think the bank is paying them to have a loan?

          A) Mortgage + upkeep + rates - rent = cost of owning an investment house
          B) Mortgage + rates = cost of owning investment land

          Do you really think that the cost of owning a house is greater than the cost of owning land? That upkeep > rent?

        • Trying2SaveABuck on 06/09/2018 - 21:13

          @Quantumcat: That wasnt what i asked i asked if YOU have ever done it?

          because the law is against landlords and unless your handy and can fix 80% of minor and major repairs (on top of that have the time) the cost of repairs are astronomical. I have made a good amount of money from investment properties but it is mostly from capital gains in my experience the rent isnt worth the up keep costs - this might not be true for everyone but for me that has been the case

          bloody hell you cant even say NO pets

        • Quantumcat on 06/09/2018 - 21:17

          @Pastry: Yes I have, I bought a block of land intending to build on it but wasn't able to, so sold it. Lost about $10,000 over all (did get more for it than I bought it for, but with all the expenses…). Also bought the house I am living in now.

          mostly from capital gains in my experience the rent isnt worth the up keep cost

          At least with rent it means you can afford to sell at exactly the right time to make the best capital gains - you're breaking even or losing a small amount. With land you don't have that luxury (the longer you wait the more you've spent).

  • [Deactivated] on 07/09/2018 - 21:14

    The sale contract will usually say what happens if you don't build within the time period.

    Most often there is a cashback incentive so you will be forefitting that.

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