Making an informed decision about investing in an old or new property is a common dilemma faced by investors. Arguments for and against each scenario has its’ merits.
Weighing up the pros and cons can be exhausting. Investing into a new property or development provides higher tax incentives, where an established property offers an opportunity to add value to an existing building, providing further potential for your investment. There are many factors that need to be considered when making your decision.
WHAT ARE THE BENEFITS WHEN BUYING NEW
- Depreciation Benefits – Maximise your tax offsets and deductions
- Protection – Investors can enjoy statutory home warranty insurances covering major structural and minor non-structural defects to new properties therefore minimising an investor’s ongoing costs
- Appeal – Higher tenancy rates to a higher quality of tenant. There is also the added advantage for tenant appeal with modern appliances and technologies, with the tenant preparing to pay a premium, lowering your risk of untenanted periods of your investment property.
- Incentives – Take advantage of off the plan incentives and grants for first home owners.
THINGS TO CONSIDER WHEN BUYING NEW
- There is limited ability to “value-add” to a new property, however exploring upgrades on appliances, fit out and finish are an option.
- Investing in a property that has body corporate and strata fees can be daunting. Think of the benefits of offering a property which has attractive amenities such as swimming pools, gyms, maintained gardens and extra security.
WHAT ARE THE BENEFITS WHEN BUYING OLD
- Value Add – Renovate and add value to the property and benefit from tax deductions from those improvements.Growth – Choosing the right well established property may over the long term outperform the averages with high capital appreciation and long-term cash flow opportunities.
THINGS TO CONSIDER WHEN BUYING OLD
- To “value-add” you will be required to invest further time, energy, costs and resources. Can you afford that, both in time and pocket?
- If you don’t improve the property it will have less appeal. This will affect an investor’s potential rental returns.
- Ongoing maintenance also chips away at profit. If a major problem is identified there is also the potential of loss of rental income and additional unforeseen expenditure.
- You cannot cash flow from your mortgage and is something you have to have in savings or liquid cash over and above any deposits or purchase costs such as stamp duty, legals etc.
With pressure currently on developers, there is an acceptance to meet market prices. There are some amazing buys and great opportunities out there! Take all the guess work out and ask the team at The PMC. We have a treasure chest of new properties that we can’t wait to share with you. Even better, no cost to any property investor or buyer for our service.