Hi all, I am wanting to build up my investment portfolio. Had previously thought about buying older cheaper homes, renovating and renting them out. Have now been thinking about the advantages of buying a new home from a newly developed estate and renting that out. My opinion is that the costs would be about the same with the added advantage of not having to renovate (i have no experience and minimal skills in that area). Have been looking at some the newly built homes on some estates. Some come with a clause that the streetscape is also monitored and looked after which as an investor, I find a bonus. I am still in the research stage of this at the moment.
Would be very interested to hear from others what their thoughts are. Thanks in advance …
Hi there
If the streetscape is monitored, it is done so at your cost. Some of the new estates these days…. the entire estate is declared a body corporate and there is an annual body corporate fee. Yay for you, you get to pay for the maintenance of the footpaths, streetlights, etc… which I thought was covered by your council rates so I guess in a new estate you are paying twice.
Older homes are often on larger blocks which allow you more scope to add improvements.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM,
As you have said about the "streetscape" is an extra fee..
I am trying to balance the convenience of the new estate against buying an older house and renovating,at the moment..any thoughts?
Hi again
This topic was debated in a separate thread recently. There are merits in each.
With older property, the block size is generally bigger, and presuming you pay an appropriate price for the property, you can FORCE equity growth through renovation.
Quite often new estates go up in value, but not always. If you buy into one that does, great, you get the equity growth. Do remember that a lot of other investors think the way you do and you can end up with a lot of empty rental properties in the one area.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Are you in a high tax bracket? As the depreciation allowances on a new building can be a nice carrot. One thing to look out for in new estates is how many houses are being released at once? If they flood the market it could effect prices (which could be good for you buying), but how many would be immediately put up as a rental? If others are slightly better or cheaper it could be vacant for a little while. Depending on the vacancy rate of the area of course.
– Nathan
Cheers, JacM….this is a great site….think I will just keep researching for awhile longer…I was just getting impatient i think…still pretty new at this…thanks for the reply.
Hi KG,
No need to be hasty – the decision you make will be around for a few years so don't be overly fussed to sign something ahead of time.
Don't forget there is something in between 'needing renovation' and 'brand new' – that is property around 5 yrs of age. After 5 yrs you will get a pretty good feel for how an estate/area will travel and how the neighbourhood is shaping up. On top of this, generally speaking something around 5 yrs old should still be in pretty good nick too so your maintenance costs etc are still reasonable.
Thanks Nathan,
the estate I have looked at is huge and there is a lot more development going on around it with other unrelated estates about to be released soon.
The area is far northern suburbs of Melbourne. Lots of work going on out there.
I think I have to step back and do more research as my decision was based on more of an emotional tie to the area..lol.
Thanks for the sound advice.
KG
Hi Derek,
sound advice thanks.
I think I am a little impatient and as I said in my reply to Nathan, I have to step back and be careful that the decision is based on emotion.
Very glad I found this site… will do more investigating of it.
KG
Hi KG,
Yeah I think that is one of the hardest things to do when you first start out… Trying not to get too emotionally attached to a property or suburb and work purely of the numbers. If it is for an investment that is, if for a place to live then that's a different story.
Hope you find what you're looking for.
-Nathan
Hi KG,
If you have trouble 'controlling yourself' you might find it beneficial to set yourself some time lines. For example.
I will spend three months learning about property investing.
I will spend two months finding a location.
I will spend two months finding out about the area.
I will spend 2 months finding a property.
obviously I have made up the numbers here but making haste slowly in property is a wise move.
Thanks to all, great advice.
I am very wary of the far northern suburbs of Melbourne… those new estates… due to the lack of public transport.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I'm wary of the areas around Mernda for instance
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
There are benefits to both.
OLD HOMES – By purchasing an older home and renovating you can often buy below the market rate, but then get a good rental return after the renovation. This can lead to increased rental yield and can help you to earn a positive cash flow faster.
By renovating you may also be able to increase the value of your home giving you instant equity.
NEW HOMES – You can claim more depreciation on a new home as all the new items have a lot of value to lose (on paper). This can help you get a greater tax return. However, with new homes you are likely to pay more and thus your rental yield opportunity may be less.
Ryan McLean
http://CashFlowInvestor.com.au
Helping You Invest In Positive Cash Flow Property
Ryan McLean | On Property
http://onproperty.com.au
Email MeI myself would HATE to be paying body corporate for a HOUSE!!! That is one of the reason I don't like investing in units. Less control over your property and more costs…lowering your cashflow.
Ryan McLean
http://CashFlowInvestor.com.au
Ryan McLean | On Property
http://onproperty.com.au
Email Me
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