I've never purchased land before. I've never built a home before. We're still at the early stages, and so far it's been a ... manageable effort. I've flipped a few properties already but they've always been existing homes. They were also purchased based on different goals than what we have today. Previously our purchasing decisions was based on buying something that we see as a medium to long term investment and something that was cheap.
Purchasing land we definitely were more selective. Besides being the obvious - location and price. We found ourselves considering factors I never thought I'd care about such as, where the sun rises and sets, elevation to other properties, future infrastructure, public transport, even the shape and size of every side of the land.
We purchased our land from the developer or in other words "off the plan" meaning it's not ready for home construction. If you look at my previous post all you can see is piles of dirt. We were open to this option as we hadn't started looking at homes and wanted more time to save more money. I also think it's our cautious way of approaching this risk. We knew we need to make a big move in regards to property soon as we've been saying we would for the past 3 years. Every year as home prices increased, we would always look back and say to ourselves, 'We should've purchased that place we saw last year." Hence why our "location scope" trip last September resulted in the signing of contracts. When we went looking we had no preassumptions we would buy anything, but at the same time we knew we had to take a risk.
If you've every purchased an off the plan development what usually happens is after the cooling off period, and your conveyancer has thoroughly reviewed the contract and they can confidently say you're not at risk of getting a dud deal, you pay a percentage of the cost of the land. The rest doesn't need to be paid until settlement. In our case settlement will be when the land is registered with the council.
During Christmas when we went back to look at the land the road had been laid and grass was being watered at the time. So we assumed we'd get a call by January. It's March today and we're yet to an update on the land. I'm not too worried cause we're not ready to build and I'm happy to keep our money as long as possible. And from past experience developers usually start communicating really well closer to settlement, as they want the rest of their money real quick after they've done their part.
So that's the straight forward, no drama process of purchasing land off property developers work. However if in the case the land you're thinking of buying is already registered, your settlement will occur in only 4-6 weeks.
Here's an update image and if you follow me on Instagram you would have seen a similar post already.
Things I've learnt or tips I'd give others from our experience so far:
- Ask all your questions, no question should be too hard or stupid for them. This is a big deal for you, they should understand that and not feel troubled to answer and explain things to you over and over and over again.
- Ask other people who have purchased land about their experience or questions you may have. I was emailing friends, calling our parents, finding forums and Facebook groups (they do exist) to get the information and advice I was looking for. I don't claim to know everything and I like to learn from other people's experiences.
- Do your research. If you're serious about an area or any property purchase you investigate. I assume you would do thorough research into the area you're considering buying before contracts are signed.
- Ask for a better price. If you don't ask you won't know. Ask about any rebates, especially if you're a first home owner or maybe the development is giving one.
- Don't forget stamp duty. Every property you buy you pay stamp duty and depending on the state that can be up to 5% of the cost of the purchase. So if the property is $850K that's $42,500 just going to the government. Sucks doesn't it! People forget about this so when you see the asking price remember to add 5% to the figure to manage your expectaions.