This might not be the right board for this question. But Ill go anyway.
Whilst my other half and I arent quite ready for retirement yet, weve been actively discussing it for ages and financially planning it in the hopes of being fully funded retires.
We often go out to this small country town that we just love. Its small but has all the amenities I reckon one would need later in life. Hospital, aged care facilities, two pubs and heaps of fishing.
An opportunity has come for us to purchase a piece of land there that we have seen many times. Weve always said, gee if that ever came up for sale wed have to seriously consider buying it.
Our inclination now is to just buy it, sit on it for 5 years and then build. Rent our place out here and presumable that should pay for a loan to build a house. Alternatively, we could sell our house here and that would pay for the new home.
Wed still do our traveling, the full lap around oz. In the next few years well do all the inland places we want (read bush camp).
Just wondering, has anyone else here done this? If so, what are the pros and cons that you experienced?
It is similar to what my late husband and I did some 22 years ago. (He was a lot older than me).
We saw this block of land and after a while decided to buy it and build. We still had our house in Lithgow and rather than rent it out (too many hassels - been there done that before) we sold the house and moved down here to Ulladulla.
If you have your heart set on the land and the local amenities are what you will want later in life and can honestly see yourself living there, then if it feels right - then do it.
I tend to go with gut feeling a lot of times and the one time that I didn't and went against what I felt it backfired and bit me on the rear end.
C'mon Ma, you only have ONE BOB. Or is there something you're not telling us?
Now Gordon, if you have thought about buying there before it was available, and you have a financial plan now, go for it. I think you'd regret not doing it. If things change you can always sell it again. We don't know what our future holds, so it's all about what's possible now. It sounds like your heart is set on this block in this location. If I was in a position to do this sort of thing I'd be in there with bells on.
__________________
20ft Roma caravan - Mercedes Benz Sprinter - SA-based at the moment. Transport has no borders.
Management makes the decisions, but is not affected by the decisions it makes.
Well getting personal here Granny but yes I only have on Bob as you call him, I call him Rob and you all call him Blue and I wouldn't change, swap or sell him for all the money in the world.
I was married to a wonderful man for 25 years before he died and now I am living again thanks to Rob.
We will have our first wedding anniversary next year on the 29th February (leap year you know).
You did ask for pros and cons. If you rent your house it could be subject to capital gains tax (check the 6 year rule). Also concerning is the damage to the house and landscaping that is inevitable. Many tenants are hard on houses. That doesn't necessarily mean holes in walls but it does mean cupboard doors, benches, carpets and drapes, white wear and so on depreciating rapidly. Tenancy laws and lease contracts cannot be relied upon to deliver vacant possession when programmed. Do not rely on income or appreciation covering your outgoings and to bring the property back to saleable condition.
Government regulation risk, examples being changes in tax and rental regulations, has been high for years and is beyond your control.
Simply put, renting the home is not worth the aggravation and depreciation. True, some might do Ok out of renting, but in all honesty one would have to be very astute and able to do repairs and maintenance oneself to earn below bank interest return.
Regarding the land, 5 years (+ the 1 yr build) will involve a heap of holding costs and you are also denied the opportunity to use that money for other purposes for that time. It is timely to ask if you have ever built before too because that has risks. For the time of building you manage costs for two properties and the prospective date for take-over is by no means certain.
For myself I would prefer to get an established property in a position I liked and when I liked. You can see what you get and the inclusions are free. No desirable location will ever be cheap. I'd sell the house I was living in while I was the occupant and downsize the personal stuff prior to the lap.
However, if you have your heart set on this land, so be it and manage the risks mentioned to your best advantage.
-- Edited by johnq on Sunday 30th of October 2011 06:43:04 PM
My sister and b-i-l did just that at the end of last year.
Early retirement, not quite 60. They couldn't afford to keep the city house though, and didn't want to take on the rental thing anyway. They built a new house on the block at Tin Can Bay Q, and just love their new lifestyle. They were a bit iffy about moving away from their young-uns, but the 3 hour drive is do-able for said young-uns...and we siblings too!
And Ma, you done good! I could see that when I met you in Toowoomba!
definitely buy the block because it's singing out to you - there's no question about that.
Here are my comments from owning multiple properties over almost 20 years. Admittedly things have been very different over the last 3 yrs. But basically I moved around a lot because of employment and bought a house where ever I ended up and did not sell because of selling costs, stamp duty, the good property market and lots of tax advantages. While there were problems renting and the rent did not cover all of my costs I did make a good profit on increasing property values and in the end when I did finally sell the places i came out well in front.
There's lots of great options with loans. You can use your equity in your current place to buy the land without having to go through the hassle of having to sell your place in order to buy the new one. That's if oyu want to go down the rental track and hope for a better vendors market in the future.
Also you can have a split loan where you only pay interest on the loan for the property purchase and in the meantime the money you have borrowed for the construction offests the interest on your loan for the land - a great option. I don't know oyur circumstances however you may have more loan options now than further down the track when oyu are older.
These are just a few thoughts and hope they are useful.
