House & Land Package Purchase 1+1 = 2.2

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I have built most of the homes I’ve owned following the 1+1 = 2.2 theory. If it doesn’t add value, then I don’t do it; I wait and find one that does. Why 2.2? Well typical financing rules require a 20% deposit, so the 2.2 allows the opportunity to extract the 20% capital (deposit) we injected into the property if we wish to use it again for another project, pay down non-tax deductable debt, or go surfing! (Now hang on, there’s taxation, banking & other rules that apply here so please don’t take this carte blanch). Disclaimer over, so back to the project.

This package was put together by a builder I knew, not to make the 2.2 but to generate building work for their construction business. You see, they bought a block of land, subdivided it and created H&L’s to sell their land on, which they would make a profit then do their building thing. Clever guys who became large developers, and here was win-win situation by leaving something on the table for the buyer to encourage the transaction. Once completed the four bed, two bathroom DLUG home was rented consistently for over 10 years before being sold for a little over twice its value before the GFC turned my life upside down. Property developers and home builders can be a great source of these value add propositions; get to know them and make them aware you are ready and able to purchase value adding propositions.