Is Buying a Property for Investment Better New
In the housing industry, property designs & trends change over time with all properties deteriorating as they age. When buying a property for investment we have the choice of either purchasing a brand new or previously lived in investment properties. People often ask us which is a better choice. There are many variants that will affect your decision but here are some of the reasons why buying a property for investment that is new is usually a much better way to go:
New properties are built with modern construction techniques & superior engineering. They are usually more energy-efficient, have better security, more cost-efficient utilities and appliances, a modern layout – and these attract quality tenants. After all, we know what we are getting.
More Tax Savings
Never lived in, brand new property = a high amount of depreciation is available to you on the property if you are an investor. At the moment 2.5% on the property can be deducted for 40 years. Air conditioners and dishwashers, for example, have a high rate of depreciation as they have a shorter life span. The external building is also subject to depreciation. You will need to have a depreciation report prepared and your accountant will advise you on your tax position.
When buying a property for investment, especially one under construction or off the plan, you may have more input and can choose finishes and colour schemes. With your eye on renting out the property, you can look for hard-wearing, low maintenance, on-trend finishes that will appeal to future tenants and your pockets!
More Rental Income
Buying a property for investment that is new means you can probably secure a higher rental yield – who doesn’t like brand new? Your tenants will most likely stay longer and you will have fewer vacancies. An empty apartment, while you are paying off a mortgage, is costly and to be avoided!
Builders take out a residential home warranty insurance against major building defects. This gives you protection in the event of a building problem – and peace of mind.
An older dwelling due to its age will incur ongoing maintenance costs. Electrics, plumbing, bathrooms and kitchens show their age! New means less spending on ongoing repairs! New means you have warranties and guarantees on your appliances. New means more energy efficiency and sustainability which lowers maintenance costs considerably.
More Government Incentives
A new property can save you thousands of dollars on your purchase. Depending on what state you are in, as regulations differ from state to state, you may be eligible for Government incentives like the first home owner’s grant and stamp duty concessions. We can help guide you through these incentives.
If you are thinking of purchasing a property off the plan, you have more time to save for your home loan deposit, the time to change fixtures and a longer settlement mean that your property could have gone up in value by the time it’s finished and instantly built some equity gains.
Like us, properties age, things start to fall apart and need more work which means more costs. If you want peace of mind for about ten years, go new!