house and land investment

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

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

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

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)

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

Dual Living Example Plan

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

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

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

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

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)

Key Considerations

Key Considerations

• Area• Capital city versus Regional• Greenfield versus Infill

• Design• Valuation• Builder

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

Area

Area – Urban Growth Zone

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

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

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

DesignTraditional Investment

PropertyOwner Occupier

Home

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

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

Property Strategy

Property CyclesWhen to Buy

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

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

property investment brief

property investment briefIndividually tailoredExclusive propertyPre-release to REI members who opt in

property investment briefClear and concise summary of the deal giving you a brief snapshot of key investment criteria

property investment briefLand and build information all in one place for easy reference

property investment briefFloor plan, site plan and areas

Our Guarantees

• Insert screen shots of PIB

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

Next Step…

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