THINKING OF BUYING OR UPSIZING YOUR HOME?
We invest because we want to build a better lifestyle in the future. But, that often means making some small sacrifices in the present.
Having a strong, healthy cash flow is important in the acquisition phase of an investment journey. This means investors usually delay their own homeownership or upsizing plans for a few years, until their portfolio is more mature.
What if you didn’t need to make that sacrifice anymore? What if you could have your dream home sooner, and it actually helped your portfolio?
BUILDING A HOME THAT HELPS YOUR PORTFOLIO
The previous heading is a conundrum to most investors.
They have been told that buying a house will set them back by reducing their cash flow position.
They know that the most desirable new homes are overvalued, and will set their net worth position back.
So how can a dream home benefit them financially?
RECEIVE A CHUNK OF EQUITY WHEN YOU MOVE IN
The fact is not all new homes are overvalued. There are big profits to be made on new properties, developers would be out of business otherwise.
The trick is to line up some land and a builder for a similar price as the developers pay.
Luckily we have worked out a way to find heavily discounted land and a cost effective, quality builder.
By buying a new dream home at a wholesale price, an investor can create a chunk of net worth to propel their investment journey forward.
THINK LIKE AN INVESTOR WHEN BUYING A HOME
However, there is a catch. If you really want to get the maximum benefit from this approach you need to keep your ‘investor hat’ on.
Remember to not overcapitalize on extras and finishes. Think about what would add value rather than just appeal.
Don’t worry, cost effective doesn’t mean the same as cheap!
Below are some examples of the finish quality on some homes built through us recently.
BALANCING CASH FLOW
So equity upon moving in sounds good, but what about cash flow? Even when buying at a discount, repayments on the new home will probably cost you more than your old one.
This may affect your borrowing ability. What can you do? Well, you may be able to optimize cash flow.
For example, you could take advantage of interest only periods during your acquisition phase.
Alternately you could build in a revenue stream to the property like a granny flat, to subsidize the cost of your mortgage.
Thirdly, if you don’t mind the idea of living in a duplex, you could build two houses and sell one to pay down debt on the other one.
HOW CAN WE HELP YOU
We do more than just investment properties. We have built many economical first homes or cost effective luxury homes to our staff and the Binvested family.
For example, here is property built just recently which would make an amazing lifestyle home.
The land was purchased $560,000, which was $100,000 below open market price. The house cost less than $400,000 to build. This home came at a total cost of just $950,000.
Comparable sales on a property of this caliber in this area (in North Western Sydney) are as high as the $1.3 – 1.5 million mark.
The Binvested client who developed this property sold it for $1.18 million in 2016, meaning that they made $230,000 in just 19 months on this deal.
We also helped another client build a pair of duplexes that created around $500,000 in net worth and $700 per week in rental each.
How? We found discounted land in Kellyville, Western Sydney for $620,000. The cost of building was $600,000, which came to a total cost of just over $1 million for the project which is valued at around $2.2 million.
Just one of these is cash flow neutral, so imagine selling one down and living in the other!
SPEAK TO US ABOUT YOUR DREAM HOME
We are always working on discount land deals. Who knows, were may have some near you soon!
Just let us know where you would like to love and what sort of home you are after and we will be sure to get back to you.
GET IN TOUCH TODAY
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