Can anyone please explain to me in laymans terms the pros and cons of builing a new property as opposed to buying an existing one?
Obviously with an existing property you are able to purchase one with tennants already in place.
I am also aware that there are some tax benefits when building. I have a very good relationship with a builder who has indicated I will not have to make any progress payments.Thanks
Andy [
]Hi Andrew,[
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New properties have maximum depreciation and repairs are minimised.You can choose the area to build in order to acheive maximum capital growth or cashflow according to your needs.You can also look at areas to minimise vacancy rates. High rental yeilds can be acheived by purchasing in an area at the start of the growth cycle.
I am sure there are other reasons that I cant think of at the moment.Regards
Bryce InglisHi Andrew
Get a copy of the June-July API magazine. It has a very good article about this (you can buy back issues on API’s website (www.apimagazine.com.au).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auAndrew,
The disadvantage of buying a new property, is similar to buy a new car. In one year, it is no longer a new car. Imagine you paid $300,000 for a new place. You paid this much because it was brand new. In 5 years, although property has gone up, you are no longer selling a brand new house, so have lost value in a way.
The advantage is, the tax advantages. (Don’t quote me on these figures, but here goes)… on a brand new property, you can claim 5% of the value of the building as a loss in income due to depressiation. This is claimed against any income you earn, and can be claimed for the first 20 years. Also, get a quantity surveyor to assess your fixtures and fittings (light fittings, door handles, curtains etc), and you can write off the depreciation of these (all at different rates) for up to 10 years too.
Dan.
If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.
If it’s got something unique, like water views, seem to go up & up & up …
A saying I heard about inner city off the plan appartments, as Dan the Man says:
When it’s just a glossy brochure, you’re sold the sizzle, when it exists (and it’s essentially competing against all the new glossy brochures) you’re trying to sell the sausage. Not quite as exciting.
Food for thought, so to speak!
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MelDantheMan not sure I follow your comment about a new property depreciating like a new car? Cars generally depreciate down to nil value (unless it becomes a classic).
Any reduction due to a new property, fixtures and fittings etc. no longer being new, will generally be more than offset by the more established garden, rise in land value, building cost inflation and general appreciation in property values?
So how is a new property like a new car?
Cheers[
]Personally I prefer old semi-do-up properties. By that I mean properties which are structurally sound, but look ugly. A fresh coat of paint, new carpet, a new garden etc. It might set you back 5k but the value you can add to the property could be worth a whole lot more than that. Requires you to purchase the worst house in the best street to get your money back on it though. Also works best if you do most of the work yourself.
With brand new properties there is no room left for improvement.
Andrew
http://www.rentmaster.co.nz
Software for Landlords
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