What makes a good house-and-land package?
House-and-land packages are often used by investors to build equity quickly and generally take advantage of favourable market conditions. How do you know if you've found a great deal?
According to Positive Real Estate’s Sam Saggers, two years ago, some investors made around $20,000 to $50,000 in equity from a single house-and-land package deal. Those with positive cash flow investments even enjoyed a considerable increase in their income over time.
However, as attractive as the returns may sound, your success is still largely dependent on your preparation through proper education, he said.
The property strategist said: “Although a house and land package is an excellent way to acquire a residence as well as a plot of land, not all of these packages are ideal investments.”
“Every piece of real estate you are interested in needs to be heavily researched. Investors looking into a house and land community need to make sure they find the best property and estate from which to extract value,” he added.
Mr Saggers shared his own criteria for picking a good house-and-land package:
1. Blue-chip zones
House-and-land packages in premium localities and estate often turn out to be better investments than those in cheaper estates, according to Mr Saggers.
Landowners and developers targeting owner-occupiers usually do business in ‘blue-chip’ areas where they can sell limited estate positions to property investors—sometimes less than 10 per cent.
The property strategist highlighted: “These are great estates to buy in because house-proud neighbourhoods will take better care of an area than non-permanent tenants.”
In contrast with “house-proud neighbourhoods”, a neighbourhood of tenants often creates a non-family environment, which could negatively impact your potential for profit, he said.
2. Infrastructure
Aside from a good neighbourhood, a well-planned infrastructure is also an indicator of good wealth-creation potential, Mr Saggers said.
According to the property strategist, an underground power, an abundance of green space, community markets, and childcare facilities are some of the elements of a well-planned infrastructure.
“The inclusion of some of these features may be the difference between one housing estate’s success and another’s failure to boom,” he highlighted.
3. Builder background
Lastly, according to Mr Saggers, make sure to engage a builder that has successfully established good real estate assets in the past.
Working with less-experienced professionals may lead to delays in the project and ultimately cost you more money and missed opportunities.
The property strategist encouraged looking for a builder with a long-term approach to projects.
He said: “Remember, your new home will come with a new home warranty for seven years. This means it is important to engage a builder with a long-term approach to their product, rather than a cheaper alternative.”
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