Browse Forums Buying Land 1 Jan 31, 2022 3:26 pm Hi All, Apologies for what may seem like an obvious question. I'm in the early stages of building my first home. I'm awaiting the land to register at the moment - was supposed to be November 2021, then Q1 2022... Now May 2022. I bought the land for X amount back in Q3 2021. Now as of today, there are only a couple of lots left within this estate. One being nearly 180m2 smaller than my block, however this block is now going for $35,500 more than what I originally got mine for. (in Adelaide if it makes any difference) My fingers are crossed that come May when the land registers, the land is valued even higher. For ease of reference, say my land is valued $80k more than what I'm paying for it. Does that mean I'll have 'equity' from day 1? Will I be able to use that to put towards a deposit for an investment property such as an apartment? Could I two months later go to the bank and say "I want to go on holidays can I use $10k from this 'equity' " Or is all the above wrong, and essentially the valuation doesn't mean a thing? Re: What happens when land appreciates? 3Jan 31, 2022 3:36 pm Just be careful getting your hopes up. Some developers see increasing values as an opportunity to cancel contracts and resell the land at a higher price. Unethical! but some developer chase every dollar! The Harder You Try - the Luckier You Get ! Web site http://www.anewhouse.com.au Informative, Amusing, and Opinionated Blog - Over 600 posts on all aspects of building a new house. Re: What happens when land appreciates? 4Jan 31, 2022 3:52 pm Short version - Yes you will you will have equity. Long version - Depending on a few factors, that full equity may not be able to be accessed the way you're thinking about it. Firstly you will have to refinance and pay all the various fees agan for doing so. And if yor ein a fixed lend, you can keep dreaming, If you borrowed to buy that land, and you still owe money on the land, then how much equity is accessible will ultimately depend on how much you owe the bank. If you borrowed almost all of the funds to buy land, you may not be able to access all the equity. The general rule of thumb is that you can access whatever equity that doesn't bring the lending above 80% LVR. So if you had a high LVR lend and paid LMI your full equity wont likely be able to be realised, and to access the full equity you may need to take LMI again which just compounds your initial costs and eats into accesible equity. No bank would let you do that because its not in your best interests (responsible lending and all). The other factor is that equity in vacant land is hard to access at higher LVRS because any banks lending systems and risk calculators will shade a portion of your equity as its generally worth "less" than the equity in a home (in risk calculations for lending decision engines at least), unless that vacant land is in blue chip inner suburbs of metro capital cities. Also don't buy apartments. they're $hit investments overall. after strata fees, sinking costs etc the cap gains from them arent as good as returns from houses. You may be swayed by bargains to be had, but there's a reason these properties are at bargain prices. If you can access the equity, i'd look at buying more vacant land in growth areas. Especially those that have good infrastructure or have transport links planned. That said, there will be plenty of opportunities to make money from apartments when covid clears up and immigration starts again, but thats a risky game given no one has a crystal ball. You could be looking at further drops in values before were back to normal. Also banks tend to look les favorably on apartment investing at the moment given vacancy rates in capital cities due to covid. So getting a high LVR loan for an apartment for investment purposes will be highly unlikely (owner occupied, maybe if all the pieces fit) Dark matter scientist, can breathe underwater, mind reader andย can freeze matter just by willing it. Trust me, its in my sig. The concreter will take and reuse. In my case I bought structural LVLs and scraped them back and used them as joists. 1 5370 Yeah I don't know why I came to a forum. Place is full of wierdos/pedos thought internet may help but I suppose I'll try my luck with someone in person. Cheers. I tried… 0 6717 Need advice on the backyard plan above. Should I excavate and cut all of the dirt to level with the house slab or semi-excavate as per photo above? Both left and right… 0 25255 |