House And Land Packages – Are They A Good Idea?

You often see house and land packages advertised and they may have an attractive price . . . . . but are they a good idea?

Here are a few more things to think about:

  1. These sort of deals are popular with property investors who just want to get a new house built and get tenants in as quickly as possible. . . Wouldn’t you prefer to have the houses next door owned by occupiers who are going to be more likely to care about the appearance of the house and garden than a tenant who has little interest.
  2. It seems to me they are usually offered on the hard to sell and the least attractive blocks which is one reason why they are cheaper. Typical problems I have seen include:
        • On a major road
        • Poor orientation
        • Be an odd shape
        • Have access issues.
  3. They are often based on the smallest possible block that will fit the house. Often they will have the houses so close together they will look more like a terrace and the back yard will be minimal.

One of the Real Estate maximums is that the way to make money on a house is by buying the right house.

Make sure you don’t harm your chances of a good future sale by buying a bad House and Land Package.

Much more advice in the   anewhouse – Guide to Buying a Block   for only $2

For similar posts on buying land see the Blocks section

 

Using Friends for Building Work

Some people say “never lend a friend money”, or “sell them a car”.

If things go wrong it can end a friendship!

I think it might be the same with getting them to do building work for you.

Reasons to think twice

  • Are they really ‘friends’, ‘friends of friends’ or just people you know?
  • Is there a chance they will take advantage of your ‘friendship’ to work at a slower rate because they are doing work for other people at the same time?
  • Do you really know how good at their job they are?
  • If they are doing it as a ‘friend’ are they insured?
  • Do you both agree on what the required quality of workmanship and materials will be? and is it written down?
  • How will you resolve things if you are not happy with the result?

Contracts give more certainty

I think that in something as important as building a house you need everything covered by contracts and insurances.

Also if you are a true friend to them you should be happy paying them a fair price for a good quality job.

I have got friends to do small things for me but for a major project I always prefer a fairly written contract.

This has enabled me to become friends of builders through building up a mutual respect.

 

For similar posts see Choosing a Builder

 

Show House Sales Tricks

The thing you need to remember when visiting a display house is it is not a real home, it’s more like a television set with tens of thousands of dollars of upgrades.

The builders want to show off their houses in the best light so you can’t blame them . . . but don’t forget you are buying your home.

Here are some of the tricks that big builders can use to make the house feel more desirable:

    • Internal doors removed to make it easier to walk around.
    • As much open plan as possible, but remember this won’t work as well when using it has a home. . . For example if someone wants peace and quiet while someone else wants to watch TV.
    • Higher than normal ceiling height.
    • Lots of mirrors and glass furniture.
    • Less furniture, for example just a bed and a bedside table in a bedroom.
    • If there are a couple of different sizes of the same model – the show house will be the bigger size.
    • Build on a larger than normal block to make it seem that there is more space around the house. . . or build two or more show houses with no fences between the houses.
    • Large windows to make the house seem light and airy. Remember the builder is happy to pay for higher heating and cooling bills for a year or so, if they get sales.
    • The minimum number of power sockets, remember the home entertainment units don’t have to work and nobody has to cook in the kitchen.

Some smaller builders may not even furnish the show house, which can make the rooms seem much bigger than they really are.

These are some of the things that you could see that won’t be in the standard package:

    • High quality kitchen and bathroom fittings.
    • Gas log fires
    • Expensive light fittings.
    • High quality tiles.
    • Landscaped gardens
    • High quality paving.
    • Water features
    • Fences.
    • Decks.

Other subtle tricks I have seen to make a show house more home like are are:

    • Coffee or baking smells to give a subtle message.
    • A few tins in the larder and cups in the cupboard but nowhere near how much you might need if you lived there.
    • A few clothes hung up in the Walk In Robe.
    • Toys in bedrooms.
    • A lace nightie laid across the bed in the master bedroom to make it more like a home.
    • One builder in the UK even paid someone to live in the house at the weekends, and show people round “our home”.

What things have you seen in show houses?

For similar posts see Starting Off

 

Big or Small Builder

At the end of the day what everybody wants is a quality house built at the right price.

So does the size of the builder matter?

Here is my experiences:

Small Builder

We had our first Australian house built by a small builder and we were very satisfied with the result.

One of the reasons for choosing the small builder was that we had just moved to a small country town.

We felt that the well established local builder we chose must be building to a good standard otherwise he wouldn’t be getting work.

Also in a small town it was reasonably easy to find people who could give you an independent view about the quality to expect.

As the nearest large builders base was in a town an hours drive from where we were planning to build we were concerned that travel costs would increase the overall costs.

Further advantages of the local builder were he was happy to build the house to our design, and that he promised, and delivered on the promise, to complete the house in five months.

In spite of me being about the most “hands on” clients that he had ever had we became long time friends with builder. A good result all round.

Large Builder

Our last house was built in Werribee, by one of Ausralias largest builders Metricon.

For this Melbourne Suburb we felt that it would be hard to get reliable references for a small builder.

We decided that a large builder would do a good job as they would be keen to maintain a good reputation.

Having had a look at a number of show houses we felt that one of Metricon’s standard designs was fairly close to what we wanted.

They  were also prepared to amend their design to meet the majority of our requirements.

For this house we were sure that travel costs weren’t an issue with several houses being built be this builder on the same estate.

One disadvantage with dealing with a larger builder is the whole process become more bureaucratic and it took a lot longer than five months to complete the house.

Overall we were happy with the house.

 

What made you choose a particular builder?

 

For similar posts see Starting Off

 

Can You Afford the Display Home?

When you visit a Builders Display you will probably be given a price list which quotes the ‘Basic Price’ for the house you are looking at.

Don’t be fooled!………the features you see in the Display Home will add much more to the cost.

The following table provides examples of the cost of upgrades included in Display Homes around Melbourne in 2017 / 8

.

Builder

House

Base Price

As Displayed

Percentage Increase

Henley Properties

Ashbury 29 $ 253,900 $ 307,821 21%

Hallbury Homes

Montrose $ 277,900 $ 420,000 51%

Dennis Family Homes

Lakewood 333

$ 259,900

$ 417,400

60%

Metricon

Metro 325L

$ 338,100

$ 551,135

63%

Metricon

Sovereign

$ 460,700

$ 791,555

72%

Burbank

Osborne 454

$ 350,300

$ 618,032

76%

All figures as published in the Melbourne Herald Sun December 2017- Feb 2018

Additional Costs

In addition to the displayed costs you might have to pay extra for:

To get some idea about how the costs can add up follow this link: What Will It Cost.

Also see

Why You Might Not Find A Builder Rating

Can’t find a quality rating for your builder?

Perhaps you should check your contract before you sign it.

Apparently some builders require customers to sign a contract that: ‘Prohibits them from publishing anything about the builder without the builders express permission.’

That could include sending a rating to a ratings website, or commenting on an internet forum.

It seems to me that any builder that has a clause like this has something to hide on the quality front.

You have been warned.

Want to find out more then check out the story at this link : Sydney Morning Herald

Update

Perth Home Builder 101 Residential removes “Unfair” clause banning customers from writing unapproved reviews
The Deputy Chair of the ACCC, who brought forward this case said “Consumers should be free to have their say about their experience with a business and must not face penalties for doing so.”

Why Display Homes Are An Attractive Option For Home Buyers

Guest post by Hubert Dwight

Homeownership is something that many of us aspire towards, and something that offers us the opportunity to secure our future and the future of our family.

The only problem is that homeownership is becoming more and more expensive as property prices rise and the market becomes more and more crowded.

Thankfully, to meet the growing demands being placed on the market, there are a number of innovative solutions being created to meet this opportunity.

We’ve all seen the property estates that are popping up in cities with a range of beautiful brand new homes available to purchase, often for a greatly reduced price as compared to the established homes within the city.

These estates are usually located within commuter distance of the city – another key selling point of many buyers and investors.

What you might not know however, is that it’s possible to purchase the actual display home that is used to showcase the houses available from the developers.

Yes, developers are building their showcase display homes and are offering these for sale to prospective buyers as a savvy way to achieve a great return on a property from the very beginning.

A display home is an attractive option for home buyers and we’ve created a short list of points as to why.

Take a look here to find out why buying a display home might be a great option for you.

Secure Your Future

Buying an investment property is a goal for many investors as they seek to diversify their assets and to gain greater financial freedom.

An investment property that is a display home, means that you’re securing a great property which is landscaped and complete with fittings and furnishings.

How it works is that you purchase the display home, and the company then rents it back from you and continues to use it as a display home for a set period of time.

You can then use the rent to pay your mortgage.

This equates to a positive cash flow property with a very reliable tenant from the get-go!

During this time, the developer will also pay the outgoings like insurance, gas, rates and electricity.

When the rental period is complete, you’ll have the option available to you to move into your beautiful home; to sell it; or rent out the property to a tenant.

No Waiting Period

When you’re buying an off-the-plan home, the process is such that you pay a deposit on the home or land based on the price at the time, and then you make incremental payments during the life of the property as the building process continues.

Often, you’ll find that the property has already increased in value by the time your build is complete and you’ll be left with some equity – a huge bonus for any investor.

The only problem is that while you’re waiting for the build to be completed, you’re not obtaining any rental return on your property, so there is that to consider.

The perks of buying a display home is that you’re getting rental return immediately, and you’re also enjoying any capital gains that might occur on the property during the rental time.

Beautiful Home

A display home is the jewel in the crown of any estate.

It’s the house that prospective buyers are going to be seeing when they’re looking to buy, so it’s in the best interests of the developers to make sure that the display home is a stunning example of their best work.

What this means for you is that you’re going to be the proud owner of the best of the best as far as their houses go – which means that you’ll have a top-quality home with exceptional fittings, fixtures and coverings.

Well, these are just a couple of excellent bonuses that you’ll get when you purchase a display home, so perhaps take thee into consideration if you’re an investor looking to buy and seeking a positive cash-flow option for your portfolio.

Happy investing!

 

5 mistakes to avoid when building your dream home

Guest Post by Hubert Dwight

If you are fortunate enough to have the opportunity to build your dream home, this can be a wonderful experience.

However, it is common for inexperienced homeowners to make lapses in their judgment when they are making decisions that are affecting the build of their home.

Below are a few common mistakes that we recommend avoiding when you are building ‘your dream home’.

Don’t Choose The Wrong Builder

It sounds obvious, but if you start off with the wrong builder, then you are on a course for disappointment.

Make sure you do thorough research on the builder that you are considering going with.

Find out as much information about the licenses that they hold and review the work that they have conducted over the last 12 months.

Find out as much as you can about the builder’s credibility to avoid falling into the trap of some building horror stories.

Additionally, you need to ensure that the builder’s team will communicate strongly with you .

The builder needs to convey that you can have confidence during the building process.

If you feel insecure about making a decision with going with a particular builder, follow your gut feeling and don’t go with them.

Don’t Just Focus On The Cheapest Option

Just as important as not choosing the wrong builder is automatically choosing the cheapest option.

Look into the details provided with the price to avoid any surprise costs that may arise in the future.

When looking into the details, find out as much information about the quality of the materials and building work that will be conducted.

If the quote sounds too good to be true, it possibly may be.

Check the details thoroughly!

Plan The Use Of Space Well

The impacts from the way the space is being used can be challenging.

Even though it may appear to be good on paper or in the display home, when you move into the home you will notice the convenience (or inconvenience) of the layout of the home.

These may include the following:

Kitchen Location

A kitchen that is placed a long way from the front door or garage can cause an inconvenience when the household goes on its routine grocery run.

Rather than making a shorter convenient trip, the kitchen may be placed in an inconvenient location when carrying heavy bags from the garage to the kitchen.

Toilet Location

You don’t want an unwanted elephant in the room (if you catch the drift!) Research and plan the toilet  to offer people privacy and to avoid any unwanted ‘shared experience’ that the toilet may offer.

Locations of Bedrooms

This is crucial if you want to make sure you get a good night’s sleep every night. Think carefully about the placement of the bedrooms in relation to external noise.

West facing bedrooms are best avoided as they can easily overheat on summer evenings.

You may want an infants bedroom to be close to yours, while teenage children may be better at the opposite end of the house!

Plan Natural & Artificial Lighting For A Well Lit Home

There’s nothing more annoying, and depressing, than being inside a badly lit house.

Plan to make as much use of natural light as possible.

Consult with your builder about how you can use windows, shutters  to control the natural lighting of the home.

Furthermore; ensure that the internal light installation will to keep rooms well lit in the evenings.

Should you want to adjust the lighting to change the ambiance, consider installing dimmers for your lighting needs.

 

Hopefully, these tips will help you to avoid making mistakes during the building phase of your dream home and will allow you to move in worry free.

Display Homes – Understanding the Builders Rep

Going into every Display Home the first person you see is the Builders Representative.

When talking to the representative it helps to understand a little about them, so here are some thoughts;

Pay

We all work for money but the Representative’s conditions of employment might be a fair bit different to you.

  • Most Representatives will receive minimal, or even no basic pay.
  • Their commission on each sale will be several thousand of dollar, but they may not get it for months.
  • Although they may get a partial payment for your initial signature they usually won’t be paid the full amount until the slab goes down.

This means their main driver is to get you committed as soon as possible. . . . So don’t be rushed. Take your time to understand exactly what you are buying. (The current ‘Limited Offer‘ will be replaced by a different offer of similar value)

Priorities

Because of the way the rep is paid their main interest will be in people who are committed to buying a house rather than ‘Tyre Kickers’.

If you don’t:

Just tell them “you are starting to look at houses”, take some brochures, and have a look around.

When you have a good idea of what you want, and just as important ‘How Much Can You Afford’ then make an appointment to go back.

It’s probably best to do this midweek when it will be quieter and your children will be at school.

Length of Employment

Because of the lack of a basic wage, weekend work, and the wait for commission, turnover of representatives can be high.

This means that it’s really important to make sure that all offers, and agreements, are clearly put down in writing.

You don’t want to get further down the track arguing for an upgrade that was verbally agreed by someone who you are then told is now an ex-employee.

 

See ‘Choosing a Builder’ for more posts

Or my Guide to Choosing a House which also contains lots of useful checklists for only $4.
 

Quick Build ?

One of the reasons that people may choose a builder is the promise of a ‘Quick Build’ . . . . . but how realistic is that promise?

Getting the house finished quickly might be attractive to you so here are a couple of things to think about before you make a choice.

Is Obtaining Permits Included?

Builders will either want to say they aren’t responsible for any planning/building permit delays of over 1 month, or even exclude the planning/building permit period entirely from the period.

Approvals should be quick for a new major development subdivision and may only take around a month.

If you are building in an established area such as an single block subdivision, or Knock Down Rebuild (KDR), it can take several months.

What Are The Liquidated Damages?

Any ‘Quick Build Offer’ means nothing unless you are compensated for any time overrun!

The way this is done in a building contract is by specifying a Liquidated Damages amount.

Unless this amount is a reasonable sum (say close to what you are paying in rent) the offer isn’t really worth anything!

 

For more information see Liquidated Damages.