Hi All, Just wondering what are the costs involved in building a new house? (in Melbourne) Say I buy a flat block for $230,000. How much would is cost to build a standard house? Also how does it work with finance.. I put down 10% deposit, are there progess payments along the way? Do you usually pay at the end? How long does it take to build? I'm thinking you save on stamp duty, as you pay on only the land ($9400) instead of $18500 Also a new house has better deprication as a IP, and should rent better since its new.. Are there any other hidden things I need to consider? Or is it better buying a established home and renting it.
Start by reading through sites like this one and you should get most of your questions addressed. Personally, I wouldn't go through the stress and would prefer to renovate an existing dwelling but we all have differing personalities http://www.homesite.com.au/new-homes-and-land
Hi crc_error, Currently in North Qld where I am, a basic block 3bdr home would cost approx 180-210k for a BASIC place, 250k for something nice with quality fittings and finishings.... Don't know about what it is like down where you are though ..... Allow around 6mths for total works, progress payments depend on the builder but would generally be monthly.... Also, don't know what rents are like there either, but I know generally 0.1% of value is acceptable - so if the place costs/is valued at $500k, then $500/week rent is what I believe to be the mark.... Even if you could get to $600/wk, all depends on the size of the mortgage you have as well..... $500k @ 9% I/O would set you back about $870/wk, plus rates, maintenance, Prop Mgmt fees, etc. But you will have a larger depreciation claim as far as I am aware.... Pre-Tax claim, you could well be down about $2k/mth, so Captial Gains would need to be there.....
Find a newish land release. Look at the first few homes going up, the size, the builder and the quality. This very often sets the tone for subsequent builds. Buy one of the cheapest blocks still available. Find a project builder that builds stylish looking but cheap homes. Spec it up with the things that people want these days. Stone bench tops, glass splashbank and polished porcelein tiles. Get it valued at completion and extract any equity via a LOC. Rent it out to a professional couple with no kids and no pets. This is my recipe and what I am doing ATM. Basic house price 167 but will be close on 300 at completion with everything included, fencing/landscaping etc. 250 house + 50 for tiles and outside extras. Yes staged payments via a construction loan, payable at base stage, frame, lockup and completion.
