First Time Building Questions...

Hi,

Long time reader...first time poster I am hoping to get some help/info about building...

1) Looking at building in Plenty River (Doreen) - can anybody tell me about their experinces building here??
2) 25/26Sq homes - size wise are these practical for two people??
3) Currently occupy a house - looking to sell in order to build a bigger home - which is the best way to go about this?? Sell first then deposit, deposit on land then begin selling process...??
4) Also, can somebody please explain to me the construction loan/land loan process??


Any info/advice re:building in general would be greatly appreciated - first time building and keen to know whether the experince has been worth all the stress/emotion??

Many thanks in advance

Til.

I can't really comment on Plenty River from personal experience as we are building elsewhere, but from our cruises around the area whilst looking at houses and the displays there it looks like a nice area.



I'd be hesitant to say a particularly sized house is sufficient or not just based on the measurement in squares - it probably more comes down to your needs (ie. entertaining, bedrooms, storage space) as well as suitability for the block you have/are looking to purchase (in terms of both size and orientation).



This is just hearsay from friends and relatives, but there are pros and cons to both:

Selling first

• Means you know what you budget will be before jumping in on the build. (good)
• Theoretically easier to get ay additional finance that may be needed from a lender if you have the cash from the previous sale ready to go. (good)
• You need to find other (rental?) accommodation for a longer period and given the current rental climate where longer term contracts are favoured (12 months+) you may be needing to breaking your lease, which usually involves you having to shell out more $$$ (kinda bad).

Selling later

• Theoretically no need to move into a rental property while the construction is taking place (good).
• Uncertainty over your budget given the relatively soft housing market, although things should pick up a little when spring arrives as per usual (kinda bad)
• There is a lot of stress attached to hitting a specific (needed) price when selling later after having already committed to a build contract price for the new house, although if you base your overall budget on a conservative estimate of what you might be able to sell your current property for this can be mitigated - you might also get a better than expected result when selling as well, but the it (selling) is a double edged sword so don't expect it to happen given the current soft housing market. (could be either good or bad)

This is something that is going to be so specific to your circumstances, the property you are currently in and what you would be looking to build that I don't think anyone can give you specific advice on what to do - might be best to talk to your financial advisor and/or a home finance broker to work out what is best for you.



There are two scenarios here, A) you are going to secure the land first and then look for a builder later or B) you will be looking to secure land and sort out the house you are going to build within close proximity to each other time-wise.

Regardless of the scenario you can get pre-approval for the finance you will require based on a rough estimate of what your total land+build cost will be to give you some reassurance that you will be able to get the finance you need based on your current circumstances.

From there you need to secure your land (do this ASAP) - a hold on a block (which basically registers your interest for the land preventing anyone else from securing it for a couple of weeks) usually costs $1-2K and the deposit to actually secure the block will cost anything from 5-10% of the sale price (make sure that the sale contract you sign is noted as being "subject to finance" so that you can get your deposit back just in case something happens and your finance falls though).

(It's a good idea to have the sort of houses you like in mind when purchasing a block so you can figure our what will work and what wont)

The next step is to get the build contract signed for the house (which is the most painful part of the process because you have to choose everything and balancing things you'd like to have against budgetary constraints is depressing at times) - once that is done you can get your (conditional) approval for any finance that is required from your chosen lender.

What the bank will do is split that loan amount into a land mortgage and a construction loan to begin with - the land mortgage will be entered into once the land has been titled and you have taken possession of the block from the developer.

From there once the final build contract has been signed off on the construction loan will be entered into and progress payments will be added to the loan as they are required.

Once the build is complete and you have taken possession of the finished house the land mortgage and the construction loan will be combined into a house mortgage by the bank and then you get to enjoy your new home.

One thing that can reduce a lot of the hassle is looking at a house+land package from a volume builder instead of buying your own land separately and then getting someone to build a house on it - the finance process is much more straight forward with a house+land package as you will usually only be required to make the usual progress payments based upon on the total house+land price, rather than having to pay for the land in full beforehand and having a split land mortgage and construction loan to begin with.



There is too much to pass on in one post and I've already probably given you too much to read anyway, but when it comes to building have a look around the H1 forums here as there is a vast amount of information you can draw upon (including the "things you forget ... " sticky at the top of this forum).

To be honest the first step I would recommend establishing a framework for your build - get your house valued by a reputable real-estate agent, explore areas where land is selling and visit them and work out what you want from your new house.

Once that is done then you can trawl the H1 forums using the search function, ask specific questions about builders or specific houses and even land estates you are considering.

Like I said though once you have an idea of what you want you need to secure your block of land lickety-split, because you can always work out the details for house later, but selling blocks of land is done on a first come first served basis and waiting too long means putting up with price rises (land prices generally rise across the board for a stage in most estates on a monthly basis) and you might miss out altogether and have to start searching again if you wait too long.

For our block the timeline went something like this:

• Looked at an estate we liked and picked out a block on a Friday back in September 2010 (a full 10 months before the stage actually titles early next month)
• Had the holding deposit to the land sales office the next day (we literally just beat another couple who were inquiring about the same block as we overheard them in the car park saying they were hoping our block would become available as we were leaving after my wife had spent 10 minutes ringing her folks to tell them the news).
• Engaged a broker to get pre-approval for us on the following Tuesday.
• Received said pre-approval in writing on Friday
• Put down our 5% deposit the next day and there were three other couples we knew of (including the one from a week earlier) inquiring about the same block - we overheard them all asking whether it was still available while they were talking with the sales consultant as we were waiting in the sales office to hand over our deposit.

The moral of that little story is that if you find a "perfect" block that suits the sort of house you want to build in a location you like then go to the land sales office and slap a holding deposit down on it ASAP, because if you don't then someone else will surely swipe it out from under you - it's a good idea to have narrowed down the house you are thinking of building to maybe 2-3 (at most 4 options) And take the floor plans in with you (the brochures from the display homes will do just fine) when visiting the land office to make sure the block you choose suits the sort of houses you might be building on it.

p.s. golly gosh that took a long time to type...

Edit: cleaned up a few typos.

Hi,

With regards to building, all I can say it's exciting, stressfull, & every other emotion you can think of that you'll go through.
However, we built 20 years ago a three bedroom single storey home, & after it was finished & we moved in, we thought " we must have been crazy " to have done that, don't get me wrong the feeling you get after you move in is absolutely exciting
Then, 2 years ago we started getting the "itch " to build again, & after visiting display centres, we had the building bug again, but this time, we promised ourselves that we were older & wiser & we'd make sure that the builder we chose will be the best one we can afford....
My advice to you is, no one can prepare you for this experience, do your homework , research & research again before you sign on the dotted line....ask to speak to current customers & look for forums & see what people are saying about the builder you choose....good luck.

Thankyou both very much for your swift replies.

Has given us both a lot to think about...
I think the friends and families we have spoken to have all said it's worth it in the end but dont go into it expecting smooth sailing all the way through.

I guess the other question i had is to build a 3 or 4 bedroom home??
We have been told nothing less than 4 bedrooms but its just seems silly when there are only 2 of us and little feet are quite some time away...i dont think we should build based on pure re-sale value...or am i mistaken in this train of thought??

Thanks again.

Til.

good luck with your house building journey Til. Don't have anything of value to add really, just wanted to say what a great post cmhamilton! thanks for taking the time to write it.

Thanks donuts! I hope to have more to add in future.
Yes i agree!! Thankyou so much cmhamilton for the great post...so much info for us to look into. Very much appreciate your time and effort

Til.

It's definitely worth it in the end because everything in the house is something that you have chosen, here as buying somebody else's house can often involve having to settle for something that doesn't tick all of your boxes and for something that does tick all of your boxes (ie. the "perfect" home) you're likely to be competing for it with other potential buyers who like it as much as you do and therefore paying more.

It isn't often smooth sailing all the way through a build but if you have realistic expectations instead of assuming everything will run flawlessly and the build will be completed quickly then it isn't quite as bad.

I agree with the advice given above though - do as much research as you can on the estate developments you are considering, the area you are thinking of building in (including impact on your lifestyle) and the builders you are considering before committing to anything.

As for the 3BR vs 4BR thing, well it depends on your circumstances - we are in a similar boat to you I think with little 'uns at least 2-3 years off yet, but we felt that 4BR's was a base requirement because our current house is like an hotel with friends and family often coming down to stay and we need the space.

Having 4BR's does admittedly help with resale value down the track too especially if there are many other houses in the development with 4BR's as yours may suffer from the "odd-one-out" effect, but in the end we're going that way because having the extra bedroom will be handy for us.

A lot of the house designs we were looking at tended to pair together 3BR designs with smaller living spaces as well, but if having larger more open living spaces isn't important to you and/or you are looking at building on a smaller block and 3BRs will suit your needs in the longer term then don't feel obligated to automatically go for a 4BR design.

Hi,

When considering 3 bedrooms or 4 bedrooms, you also need to consider how long you are planning to stay there.
If you are thinking of having kids down the track, are you planning to stay in that area? If you build a 3 bedroom, and if you require 4 bedrooms down the track then you will also have to factor in agent selling fees, moving costs, stamp duty (if buying established home) etc.

In my case it was only about an extra $7000 to $10000 to select a design with a fourth bedroom over the same design with a three bedroom.

Another option is to choose a home design that can easily be extended down the track if required. However rennovations cost a lot more than adding on the additional room in the first place.

Good luck!

Hi Til,
We are currently building in the Plenty River Estate and are very happy with it. We are opposit the park in a lovely spot. We did have a few issues with the land not being released on time and lack of communication between the sales office in Doreen and ourselves. However I have been dealing directly with the city based office with any questions that I have had and they have been wonderful.

Hi there,
I can't help you at all on the area you are looking at but at first time builders ourselves, it is a ROLLER COASTER ride!! It's overwhelming, exciting, stressful, frustrating, fun, and everything else in between.

As for the size of your house, it all depends on you, your land & what your 'needs / wants' are. Everyone is different, so go look at as many displays in varying sizes and see what 'feels' best and ticks all the boxes.

With selling, we sold our house first then put a deposit on land. This way we knew exactly how much money we had to play with and could budget accordingly. We were "fortunate" in that we have been able to lodge with the in laws (although not so fortunate for my sanity), so we have not had to worry about renting etc. If that is not an option, then you need to work out what is best to do for you.
Good Luck