There are many alternative ways of buying or investing in a home. One of the options that we have is that of purchasing a house and land package. House and land packages work differently than separately buying land and then working with a builder to create or choose from an array of designs for your new home.
How do house and land packages actually work?
Typically the financial process of purchasing a house will consist of purchasing land, and then paying for a retail builder to begin construction. When advertised, a house and land package will be displayed with a single price – this includes the land price as well as construction costs. The package is ultimately two separate contracts that are combined to secure in your land as well as home. Property developers will often present buyers with a set of standard or customizable homes that are available in the package – and there can tend to be a varied level of choice in relation to features that you might want in your home. Typically you will be required to place a 10% deposit on the land unit, and a 5% deposit on the building contract.
Purchasing a house and land package
House and land packages tend to be cheaper than buying already established homes. Due to this, the potential for capital growth is significant if you are seeking to invest in a home. As an owner-occupier, there are obvious benefits in purchasing a package that will amount to less cost than buying an already established home. You also have time to save and gather your finances between making the deposit and the building of your home.
Whether you are an owner-occupier or an investor it is a great feeling to know that the home that has just been built is not going to require a major amount of work anytime soon. New house & land packages are great because they require very little upkeep for a long time, and are usually covered by a warranty.
Searching for land that works with your chosen house design from a builder that builds in the location that you choose to build in can be a headache. If you need a time efficient option to a new home build, then choosing a house and land package is a great option. All the hard work is done, and you won’t have to deal with the unknown of site costs and coordinating different parties. A house and land package, although technically two contracts, is all done through one party for ease.
Have a turnkey home
‘Turnkey’ house and land packages are also available – this means that once completed the house is ready to move into. It will be fit to move into with little or no work needing to be done – lights will be fitted, walls painted, landscaping done etc. When building with a retail builder you may still find that there’s an amount of work that needs to be done before you are able to move in after completion. A turnkey home will allow you to save money on extra costs.
In some cases when purchasing a house and land package there is a small amount of choice in regards to features of the house and alterations that can be made to existing plans.
Paying with no rental income
Specifically for investors, it should be kept in mind that there will be a large amount of time during construction where you are paying for the home without any rental income. As you pay the stages for your construction loan, you will start paying interest on those payments – so ensure financial planning ahead of time in order to account for this period but generally, it is no longer than 22 weeks.
If these pros talk to you and you’re considering investing or moving into a house and land package, you need to speak to an expert. At iBuildNew we have consultants who can guide you with independent and expert advice. Call us on 1800 184 284 or book a call online.