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Innovative Sunshine Coast parents have used their equity to help their son buy his first home, and made a great profit for themselves as well. Have you ever wondered how first home buyers will ever afford to get into the property market? Living expenses and rents are so high, our kids are living at home for much longer, and may never really want to move out.
That’s certainly bad news for parents wanting their house (and lives) back, however the good news is that there are in fact, a number of excellent options available to families wanting to avoid living with their adult children forever. “Equity Pledging” is one of the more popular options, and is an easy way to help your children buy their first home, while also making good healthy profits and high cash flow returns, for yourself along the way.
We recently sold a pair of lowset duplexes for $720,000 to a local family trying to help their son secure his first home. After mentoring them through the buying process, we found a fantastic property option for them, in the form of a new land and build package. The family entered into a contract with the builder to construct a full turn-key, fixed price house & land project and on completion, the duplexes will be split into two strata titled units, one for their son and one for the parents.
Their son qualified for the First Home Buyers Grant, securing $20,000 for his first home, while Mum and Dad also benefited by securing an investment property, with equity upside on completion.
What about the numbers?
With a 6 month build time, the total cost of the House and Land Package was $720,000, which equates to a very affordable $360,000 per unit. On completion of the build, the new price will be based on direct comparable sales, of approximately $850,000 to $860,000.
This means that this family have now made an easy $140,000 in approximate gross equity, while also providing their son with the means of entering the property market. The benefits for Equity Pledging are extremely exciting, and customisable to many individual situations.
This family can now ask for a new bank valuation, and discuss options to release the current equity over to the project and their son could then be in a position to stand alone. It is important to speak to a trusted team of Independent Advisors at the start of your project, to ensure the process is safely assessed, everyone involved is protected and your risks are covered.
At HPA we always recommend you seek good advice and always be prepared with the knowledge you need, prior to commencing any real estate project. Every investment we work on, has to have an upside, potential and low risk for our buyers. Considering an investment property as a business, is essential to gaining a successful result, and this business should be designed to make you money. We currently have 2 very similar duplexes available if you are looking to jump into an excellent cash-flow, great money making investment opportunity.
Please call to discuss your property goals, with Michael Knights on 0409 018 778.