House & Land Package 1+1 = 2.2 – 4 Bed, 2 Bath, DLUG and Huge Yard

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While most of the homes I have owned follow the 1+1 = 2.2 theory, we have held for the longer term as rental properties there are times in the marketplace when building to sell can also make sense. Completing projects like this is great for cash flow, but not necessarily tax effective if you complete it in under 12 months. However, cash is king as they say, and if you can flip a project fast and bank the money, that is pleasing. 

In this project I teamed up with some friends who had spare cash they wanted to invest. We bought the land from a large developer at the right time and secured the site under market value (small win), but combined with the cost to build a home assessed against the market value of completed homes there was a nice margin. If it doesn’t add value, then I don’t do it; I wait and find one that does. This package was premised on these factors, but also that many of the sites in this estate were small and yet a part of the market wanted more traditional large yards for kids or to park caravans and boats etc. down the side of their home. As such, I bought the biggest block in the ‘street’ appealing to this buyer, but also to have less competition when selling. 

I designed a four bed, two bath, DLUG home and positioned it completely to one side of the block, leaving a large side to rear yard. It worked. The home didn’t sell instantly, but it sold to an older couple with a caravan. Satisfyingly, when I check Google Maps as I write this, there is a van parked at the side of the home just as planned. Back your beliefs! The return on capital invested (equity) in the project was just on 100% which was divided equally between my friends (investors) and us (developers) meaning they obtained a 50% return on their money in less than 12 months.