As you have realised by now, one of the main strategic advantages of the house and land packages we offer is the net present value equity gain. Put simply, a completed version of your house & land package is worth 10-15% more right now. How do we know this? We walk 200m down the street and look at similar houses that have just sold. People are happy to pay that premium price for an established house so they don't have to go through the building process, and are able to walk straight into their completed home.

Often by the time we complete your house construction, this difference ends up being around 20% plus - depending on growth during the construction period.

Let's use a package price of $300,000 as an example.
If we work on averages, this will have a completed value of $360,000 and rent out at around $350 per week.

Paying $300,000 for a house that rents out at $350 per week is fantastic, but still not positive cashflow if you haven't put any of your own equity into it (you are paying interest on the full $300,000).

To overcome this, as opposed to building one house, some clients build two at the same time. Upon completion, they will sell one and direct the profits into reducing the loan amount on their 2nd house which is held as a longer term investment.

In our above example, this $60,000 profit on the first house (which will be reduced to closer to $40,000 after tax & expenses) can be used to pay down the other loan. If the net profit figure is $40,000, then the other house will have the loan reduced ($300,000 -$40,000) to $260,000. Now having a $260,000 house earning $350 a week in rent is great. When combined with an annual depreciation of over $8,000 - depending on your tax position, this can result in positive cashflow.

In addition, if the house is now valued at $360,000 and you borrowed $260,000, you now have $100,000 worth of equity in your investment property. After only 12 months you now have a great equity base with which to embark on your next project.

While we are not in a position to advise on issues such as Capital Gains Tax - the specific construction timing is generally quite favourable to offset this and maximise your outcomes.