# Buying a block of land now to avoid paying more in the future?



## mini696 (3 August 2009)

My wife and I plan to move into an area where the government is buying up spare land and making it into national parks. There is a block we have our eye on but our plans don't have us living there for 5-8 years.

Would you suggest buying a block now (I would need a loan, and I have no other investments), and by doing this I would avoid any future price rises/unavailability. Or would you not buy to avoid paying money (interest and rates etc) into a property that wont produce any income?


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## prawn_86 (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*

Mini,

Please note it is against the law for members to provide financial advice, unless they are licenced by ASIC, so any responses will need to be general in nature.


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## Largesse (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*

aussiepropertyforums.com ?


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## mini696 (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*

No worries about the financial advise thing.  Just looking for opinions.

I just found the property forums and will post the question there too.

Thankyou for your help so far.


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## trainspotter (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*

Do the research mini696 prior to buying ANYTHING. Whether it be shares/property/vacuum cleaners etc. As for purchasing a block of land in a certain area, it is one way of getting your foot in the door without having to shell out large dollars (house included). Don't worry too much about it being non income producing as vacant land in general should on average increase by 20% per annum. (in certain areas) It is also a good leveller for when you do decide to build (maybe) as you will have the mortgage on the block PLUS the existing living expenses. The other advantage to buying a block of land NOW is that interest rates are low and you should be able to pay off a fair bit of interest and capital component in 5 to 8 years. (Depending on repayment factors etc.) 

I reiterate that this is a generalisation and should not be taken as financial advice in any way shape or form.


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## Largesse (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*



trainspotter said:


> vacant land in general should on average increase by 20% per annum. (in certain areas)


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## Amor_Fati (3 August 2009)

*Re: Would you buy a block of land now to avoid having to pay more in the future?*

I agree (with Largesse's doubtful looks). Where are these areas? I am sure it has happened in the past in particular places but that is a very general statement.


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## trainspotter (3 August 2009)

I was trying to keep it as general as I possibly could for fear of retribution from ASIC under the financial code of conduct etc.

Adelaide - Aldinga Beach
Geraldton - Seacrest Estate
Bunbury - Dalyellup
Anywhere in Collie W.A.
Adelaide - Elizabeth

Just to name a few. Not much on the Eastern Seaboard. I think there was one subdivision in Townsville?? notice the brackets outling *in certain areas* I was looking at it through MY eyes (property investor) not limiting it to one specific area in Australia.


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## skyQuake (3 August 2009)

mini696 said:


> My wife and I plan to move into an area where the government is buying up spare land and making it into national parks. There is a block we have our eye on but our plans don't have us living there for 5-8 years.
> 
> Would you suggest buying a block now (I would need a loan, and I have no other investments), and by doing this I would avoid any future price rises/unavailability. Or would you not buy to avoid paying money (interest and rates etc) into a property that wont produce any income?




I'm not a property expert but how would buying that land help? Will it not be compulsorily acquired in the end by the govt?
If not, I think you'll need to pay land tax on unbuilt land, which can be substantial depending on the council.


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## trainspotter (3 August 2009)

skyQuake said:


> I'm not a property expert but how would buying that land help? Will it not be compulsorily acquired in the end by the govt?
> If not, I think you'll need to pay land tax on unbuilt land, which can be substantial depending on the council.




Unlikely that local Govt could resume existing RESIDENTIAL land for state forest planning. Possible to resume zoned GENERAL FARMING for this purpose. Not enough information given to form complex reply.

Land tax is from the (Insert State where you live in here) Office of State Revenue and is not controlled by the council. Undeveloped land $$$ is in the vicinity of $500 land rates for council and $500 for water rates. Being very rubbery and generous with the figures here depending on cost of block, size of block, zoning of block. You get my drift.


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## Timmy (3 August 2009)

If you want a particular piece of land and you think it is going to be locked away by government action in the near future then buying it now would appear to be the only logical thing to do?  Leave you to investigate all the details etc. but there would appear to be no other course if you want _that _land, right?


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## Julia (3 August 2009)

trainspotter said:


> Don't worry too much about it being non income producing as vacant land in general should on average increase by 20% per annum. (in certain areas)



That's rather a wild statement, trainspotter.   
And I wouldn't be so nonchalant about the investment being non-income-producing.   If the block of land costs, say $200,000 and you're paying interest on a loan for up to eight years, interest rates being almost certain to rise significantly in that time, I'd be thinking about what else I could do with that money and find a block of land when I was actually ready to build.

However, perhaps this is a perfect piece of paradise and no other bit of dirt will do.


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## gfresh (3 August 2009)

You'd also have to consider if the government were buying the land around it, you're not going to be getting much in the way of services anytime ever in the future, and some may actually be removed. You'll have to become pretty self sufficient with power, sewage, water I would think.


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## ChilliBlue (4 August 2009)

I can tell you from my work experiences that large property companies purchase land (often greenfield sites) and hold onto them for a building date much into the future.

Woolworths and Coles property arms have target builds of 10-20 years into the future whilst the larger ones like Westfield and Stocklands can hold onto land for up to 50 years before building.

Like you have read in this and other threads, you needs to thoroughly research any purchase.


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## trainspotter (4 August 2009)

Julia said:


> That's rather a wild statement, trainspotter.
> And I wouldn't be so nonchalant about the investment being non-income-producing.   If the block of land costs, say $200,000 and you're paying interest on a loan for up to eight years, interest rates being almost certain to rise significantly in that time, I'd be thinking about what else I could do with that money and find a block of land when I was actually ready to build.
> 
> However, perhaps this is a perfect piece of paradise and no other bit of dirt will do.




I have given examples of vacant land increasing by 20% for several years in a row that I have purchased previously. Identify the hot spots Julia.

Non income producing could also mean that the capital gain is there for the taking as well. I repeat *IN CERTAIN AREAS*. I have purchased blocks of land previously just because I liked the VIEW. 

By the time 8 years is up and you are ready to buy the property of your dreams the market has jumped right through the window of opportunity. Ooooooooooops


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## nunthewiser (4 August 2009)

trainspotter said:


> I have given examples of vacant land increasing by 20% for several years in a row that I have purchased previously. Identify the hot spots Julia.
> 
> Non income producing could also mean that the capital gain is there for the taking as well. I repeat *IN CERTAIN AREAS*. I have purchased blocks of land previously just because I liked the VIEW.
> 
> By the time 8 years is up and you are ready to buy the property of your dreams the market has jumped right through the window of opportunity. Ooooooooooops




um in that same GERALDTON hotspot have you not noticed the 50% discount prices been  offered by the BAYCORP?bayform?somethin like that .... (managed by RON HARRIS anyways )  fire sale ? mt tarcoola ......79k right next to blocks preciously sold not even a year ago at 130-180k..... utakarra 50k right next to blocks previously at 120k .cape burny 79k right next to previously 130-190k

and even the firesale blocks still were NOT all sold , good luck trying to sell a block of land in gero at present for 2007 prices

aint all sunshine and lollipops m8 and past returns dont mean future returns are the same ......


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## trainspotter (4 August 2009)

nunthewiser said:


> um in that same GERALDTON hotspot have you not noticed the 50% discount prices been  offered by the BAYCORP fire sale ? mt tarcoola ......79k right next to blocks preciously sold not even a year ago at 130-180k..... utakarra 50k right next to blocks previously at 120k .cape burny 79k right next to previously 130-190k
> 
> and even the firesale blocks still were NOT all sold , good luck trying to sell a block of land in gero at present for 2007 prices
> 
> aint all sunshine and lollipops m8 and past returns dont mean future returns are the same ......




Absolutely nunthewiser. I repeat *IN CERTAIN AREAS* like *SEACREST*. The other subdivisions you are talking about had firesales due to the developers requiring funding for continuance for the syndicate members. All of the developments you have referred to are lame ducks. _*ie*_ location, soil type, future planning, streetscape, blah blah blah yadda yadda yadda. I still hold a lot of property *IN CERTAIN AREAS.*

Identify the HOT SPOTS. Don't limit yourself to LOCAL product. Australia is a BIG place and there are some fantastic locations out there tremendoulsy undervalued . IMO.


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## trainspotter (4 August 2009)

The subdivision at Sunset Beach had sales evidence of $180,000, 12 months ago. Recent auction ... blocks 2 streets away sold for $107,000. Great value for money there ! NOT. Over in Waggrakine there are bank repo blocks (2.5 acres) for $180,000 that were on the market for $400,000. 

Poor little Geraldton got caught with her nickers showing ! IMO.


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## nunthewiser (4 August 2009)

trainspotter said:


> The subdivision at Sunset Beach had sales evidence of $180,000, 12 months ago. Recent auction ... blocks 2 streets away sold for $107,000. Great value for money there ! NOT. Over in Waggrakine there are bank repo blocks (2.5 acres) for $180,000 that were on the market for $400,000.
> 
> Poor little Geraldton got caught with her nickers showing ! IMO.




yep same as drummonds , an oversupply of subdivisional exhuberhance towards the end of 07 early 08 kinda left a bit of an overhang .coupled with a "certain developer" being forced into a firesale scenario has left a bit of a mismatch on block prices around the joint ....... we got one subdivision demanding X prices and the subdivision next door to it trying to floggem for whatever they can get as they needed the cash in a hurry

intresting times

not just geraldton showing there knickers tho ..... a lot of these regional "wonder " developments caught with a sheetload of new blocks they cant sell for what they wanted a year or 2 back ...... 

i have no love for "XXXX holdings" by the way as they tried to bully there way against an intrest i have in the shacks down at  cape burny so may they swallow themselves i say . wouldnt mind grabbing the ole resort tho if and when they go asss up 

However ..... as far as the main man goes at Seacrest development , i have a great deal of respect for his achievements and business input in the midwest .may he prosper and grow ....


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## trainspotter (4 August 2009)

I was down looking at the Greenough River, which has broken it's banks to the ocean the other day and could not help but notice the Resort all locked up. WHAT A WASTE ! I will join your syndicate nunthewiser to purchase said property as I have very fond memories of the joint.

Seacrest. Blocks purchased for $56,000 sold 3 years later for $150,000. 

Shark Bay / Denham. Bought 2 blocks for 750k onsold 10 months later for 1.26 million.

CBD Geraldton 4000m2 for $226,000 onsold for 600k.

Hot spot? What Hot spot? LMFAOOOOOOOOOO  Don't get me started on Adelaide. Pffffftttttt !


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## nunthewiser (4 August 2009)

trainspotter said:


> I was down looking at the Greenough River, which has broken it's banks to the ocean the other day and could not help but notice the Resort all locked up. WHAT A WASTE ! I will join your syndicate nunthewiser to purchase said property as I have very fond memories of the joint.
> 
> Seacrest. Blocks purchased for $56,000 sold 3 years later for $150,000.
> 
> ...




yep ....... re blocks BUT they were obviously bought before the top of the mini boom up here ... geraldton and surrounds been VERY kind to me also and was fortunate to start purchasing in the area from around 2001 ...big difference ........ 

i heard them same returns were available pretty much ANYWHERE in oz if one entered at the right time 

as i said before  previous results dont mean future results ...

yep the greenough rivermouth an awesome undiscovered spot . and may it stay that way actually ........ some nice fishing about a km north of the carpark just this side of the point while the river running


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## Aussiest (4 August 2009)

Julia said:


> perhaps this is a perfect piece of paradise and no other bit of dirt will do.




Ha! (love the expression)...


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