What is the best land size?
Sometimes people are confused about what’s the best land size, and what is the land to building ratio. In fact, there’s no best land size, best land size is the biggest block at my head theoretically but it’s not just that. To become a land specialist, you have to know why!
Let me put it into simple terms for you. In 10 to 20 years, blocks will be as small as 75 square meters to 100 square meters. Why do I say ten to twenty years? You can do that now as a matter of fact. Parts of Brisbane, I can show you a 75 square meter block and in the Gold Coast City and lots of the other council. Now, you can do 100 square meter blocks. So I look at my portfolio of residential properties and some of the blocks are 400 square meters, some are 500-600, some are even a thousand square meters.
Particularly, some of the older ones that I bought for many many years, thousand square meter blocks. I look at that as being a size that might have four, five, six, eight, ten dwellings in 10 to 20 years time.
What’s the best land size to buy?
The best one to buy is the most affordable for you that uses up the least of your borrowing capacity. Why? It is entry-level, it gets you in, use up the list of your bar capacity and when you get some growth, you’ve got the ability to duplicate because two is always better than one.
In fact, you get grows out of the tube. It’s really a mathematical equation and I think the mistake we make is we get too caught up in the property rather than the maths of compound growth. And the maths are compound growth one plus one equals two times two is four times two is eight etc. And once we’ve got that compounding effect that’s the most important thing. So don’t put it off, get in at that entry level if you’ve got borrowing capacity at that low end, take it!
Particularly now, the markets are running. So they’ll all provide good upside for you. The other thing I find with the low entry or this 300 square meter blocks, for example, that might have a house on it and the total cost is under four hundred thousand dollars is that the rent, or is always easy to rent, returns are very good. But at that low end, there’ll always be a jump and a spike in that market that gives you the equity to grow into a duplicate.
So there’s no right size. It’s really a specific mathematical property calculation for you to do one thing to amass a number of properties whatever that is 3,4,5. And they’ll all be called the median house, and guess what, the median house will go up by, history will teach us, around nine percent per annum over a long-term period. That’s it. If you’ve got one median house – nine percent, if you’ve got two it doubles if you’ve got three etc etc etc. So as many as you possibly can in the shortest period of time, you possibly can.