My FA is very pro real estate investing and is a fan of Kiyosaki and Steve’s, but he doesn’t want me investing in old properties as the depreciation is lost and therefore cashflow is limited. I guess you will say that it depends on the deal and so long as it is a cashflow property and in a good location, then who cares whether it is old or new.
I’m interested in your comments, even though I have rudely preempted them.AXJ
my thought is new or old as they will both continue to appreciate in value over time. If the numbers stack up on paper than it doesn’t matter to me what the property is like. If old then you can renovate for some serious dollars as for new than its harder to add percieved value to property. I have renovated 3 old queenslanders and made money on each of them. I dont buy for tax advantages to claim the depreciation. with the old properties-they were diamonds in the rough and we made a difference to their final presentation. Most new homes built these days are mass produced by large builders who sub-contract subies and the standard and quality isn’t always there. I am only generalizing here but some look the same and they build new estates that look like a lego city complex. Older homes have more charm and character and and structurally strong even after 100 years. In the end its your choice my friend
JohnHi aussiexj,
Not property related but have to ask???
Do you ride a motorbike,namely a Yamaha???
Cheers Len
No, but thanks for the reply.
AXJ
Hi, depends on where the old property is. We bought one at auction (went to have a sticky beak at a local auction with my mum and 6 kids and a dog and came home with a house). Had to work up the courage to tell my hubby – no worries.
Everyone else (mostly neighbours) at the auction (except the other bidder) thought we were bonkers. Red shag pile carpet, brown shag pile carpet, yellowing cigarette stained ceilings and walls, original kitchen and bathroom, white ants eaten through the separate car port (basically pushed it over to clear it up).
Reserve was $140K. Because of the other bidder, we paid $171K, spent about $30K and a lot of elbow grease on it. It is now spic. Three or so years (and one housing boom) later it is worth at least $500K.
Old houses don’t mean you don’t get depreciation. Get the advice of a quantity surveyor and you will find there is still scope to depreciate things. Don’t forget, what you “lose” on depreciation you may well pick up on capital gain.
I think also that even if you don’t have much to depreciate, what you spend on new kitchens, bathrooms, etc increases your cost base and the capital gain at the end is less because of it.
I love old houses. For me, they have so much potential to turn a sow’s ear into a silk purse and make money.
I am only speaking what I have experience of. I have never bought a new house and I am sure the depreciation is a big drawcard. Go with what you feel suits you.
Regards, Wylie.
AXJ,
From where I sit, I concentrate on the ‘steak’, the bit that actually makes you the serious money, and with all houses it’s really really old – like a couple of billion yrs old.
Depreciation and cashflows regarding the box on top are the ‘peas’. Accountants always get in a tizz over those because it’s their area of expertise.
Now if you ask a Geo or surveyor what is important, they’ll probably say the steak… i.e. the land.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
So a good deal is a good deal and due diligence rulz in the end.
AXJ
aussie,
It’s usually older properties that are CF+. Try finding an 80k new house with 160 bucks rent a week. If you can do that, then buy it. I don’t see any new houses around that are CF+, but if you do- then I’d say go for it
kay henry
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