[webinar] fundamentals of house & land, duplex and dual living opportunities
TRANSCRIPT
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house and land investment
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Introduction
• builderbuilder provides House and Land and Dual Occupancy packages
• builderbuilder uses REI online tools to develop individually researched property deals
• REI members have the opportunity to opt in to receive the pre-release of our deals via a Property Investment Brief
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House Overview• A purpose built single home on single lot
• Widely accepted by all Town Planning Schemes
• Building regulations are Code Assessable
• Finance up to 95% LVR
• Can be valuations issues if dwelling or lot is too small
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House Strategy• Price point $350,000-$550,000
• Yields 4.75%+
• Some equity gain possible during construction
• Entry point for first construction deal
• Important to buy in the right area (in-fill) and estate
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House Example – Rochedale QLD
4 bed + Study, 2 bath, DLUG
Package Price: $949,000
Land Settlement: 06/05/2015Construction Complete: 04/12/2015
Appraised Value on Completion$1,200,000 - $1,300,000(03/2016)
= 26% - 37% Gain
Market Rent: $1,580/wk (8.3% Yield)
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Dual Living Overview• A purpose built house with two separate dwellings
internally
• Cannot strata
• Town planning limited
• Building regulations same as duplex
• Finance similar to a house but better cashflow up to 95% LVR
• Valuations issues if too large
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Dual Living Example Plan
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Dual Living Strategy• Price point $475,000-$650,000
• Price 10-20% higher than a house
• Great cashflow with yields 30-40% higher
• Some equity gain possible
• Ideal to increase serviceability in existing portfolio
• Ideal for first home buyers who can rent out secondary dwelling as an investment property
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Dual Living Example – Ipswich QLD
3 bedroom house + attached 2 bedroom
dwelling Land: $180,000Build: $269,000Total: $449,000Market Rent: Appraised at $550-570pwGross Yield: 6.4%Total dwelling size 200m2
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Duplex Overview• Purpose built two dwellings on one property
• Strata title upon completion to obtain 2 dwellings
• Attached or detached
• Higher density zoning required
• Finance up to 90% LVR (half 80% half 90%)
• DA or MCU as of right
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Duplex Strategy• Price point $630,000 +
• Advanced strategy for a client who has already done a dual living or house package
• Strong yields and cashflow
• Flexibility of 2 properties in 1
• Equity release upon strata title
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Duplex Example – Pimpama QLD
Attached 2 x 3 bed, 2 bath single garage Package Price: $640,000
Land Settlement: 07/11/2014Construction Complete: 24/11/2015
Appraised Value on Completion$720,000 - $760,000 (03/2016)
= 12.5%- 18.8% Gain
Market Rent: $750/wk (5.9% Yield)
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Key Considerations
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Key Considerations
• Area• Capital city versus Regional• Greenfield versus Infill
• Design• Valuation• Builder
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Area
• Capital City areas are more stable than regional areas
• According to Core Logic’s Winner and Loser Report for Dec 2015 the combined capital cities percentage of losers for houses was 4.7% compared to 11.3% for combined regional areas
• Due to location of infrastructure and population
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Area
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Area – Urban Growth Zone
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Area – Urban Growth Zone
• Relies on affordability and development of new infrastructure to drive median price growth
• Median price accelerates in the earlier stages when infrastructure is being developed
• The ‘myth of over supply’ in master planned estates
• What was once the urban fringe are now established areas or infill regions
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Area - Greenfield
• Relies on existing infrastructure and limited supply to drive median price growth
• Larger lots are subdivided into smaller lots surrounding by existing dwellings
• Median price growth varies considerably between existing suburbs from year to year
• Price points higher than urban fringe
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Design
• Investment design is all about facilitating ‘rentability’ and then the re-sale to an owner occupier without over capitalising• Functional designs with a 2nd living area• Storage for livability• Higher ceilings for volume• Appealing façade
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DesignTraditional Investment
PropertyOwner Occupier
Home
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Valuations
• Do not overcapitalise for the area• Why are comparable sales so important and
what do they mean for houses and dual occupancy dwellings
• Agent market appraisals• Mortgage valuations and what it means for
you
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Builders• We only work with reputable builders• Have proven themselves to be reliable, quality
builders• Have proven in-house construction management
system• Standard pre-negotiated build contract terms • 16 to 20 weeks• Liquidated damages• Fixed price • Turnkey
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Property Strategy
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Property CyclesWhen to Buy
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H&L Dual Living DuplexPrice $420,000 $475,000 $630,000LVR 95% 90% 80%Deposit $21,000 $23,750 $126,00Rent pw $400 $630Rental YieldEquity $30,000 -
$60,000Approval Period
8-10 weeks 8-10 weeks 12-16 weeks
Strategy Capital Growth
Cashflow Equity
Product Comparison
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Type of InvestorH&L Dual Living Duplex- Low deposit looking
to get into a deal- Looking for med to
long term capital gain- First land and
construction deal
- Low income with minimal serviceability
- First home buyer to rent out secondary dwelling to an investor
- Negative geared property portfolio
- High income looking for equity
- Turbo charge portfolio with 2 strata titled properties
- High income needing deductions
- High borrowing capacity
- High deposit required up to 20%
- More experienced property investor who has done a land and construction deal
- Looking to recycle deposit and move onto another deal on completion
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property investment brief
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property investment briefIndividually tailoredExclusive propertyPre-release to REI members who opt in
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property investment briefClear and concise summary of the deal giving you a brief snapshot of key investment criteria
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property investment briefLand and build information all in one place for easy reference
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property investment briefFloor plan, site plan and areas
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Our Guarantees
• Insert screen shots of PIB
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Expression of Interest (EOI)
• Submit EOI form at back of Property Investment Brief with $1,000 refundable deposit
• Land and build contracts sent directly to you and your solicitor
• Land contract subject to 21 days finance
• Build contract subject to settlement of land
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Next Step…
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