Hi everybody,
I was wondering if anyone could advise me whether it would be financially better to purchase a brand new investment property or to buy a property a few years old? I know that depreciation is more in a new property but will you pay the price for that given that brand new home prices are overpriced anyway?
thanks in advance for your help.
Hi There,
Don't mean to sound rude but I think you have answered your own question. New dwellings have their place depending on what type of an investor you are but if you are an aggressive investor then they generally don't suit. The reason for this is you cannot generally subdivide a block, develop the block of land, extend or renovate with a new dwelling. I am basing this on the Sydney market and new properties in general. So this may differ depending on the location of the property.
Have you been looking at units or houses?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
There's generally more scope to add value to older stock.
You also tend to pay a bit of a premium for newer properties.
Keep in mind that you can still claim depreciation on older properties as well (just not as much).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Agree with other comments, it depends on what you want, and how much time you have to contribute. I have 2 older properties, and the potential repairs do play on my mind sometimes, however, plenty more oppurtunity to add value, and on large blocks. If you can buy them at a point where they pay for themselves from the start, then you aren’t relying on the depreciation to bring you back to square or better.
I love answering questions which seem to state the obvioius with an ambivolent … IT DEPENDS.
You should always have some idea about the structural integrity and quality of your purchase. If its a good shell and a mediocre interior, then it really doesnt matter whether the building is 5, 10 or 50 years old. A good build survives time a lot better than a cheap construction. You may be facing work with anything over 7 years, but unless your tenancy wears a golden halo, you'll be doing small repairs and amendments to your property over time anyway.
Check the quality of any floating floors. Dont be afraid to stamp your food on it. If you feel any vibration or give under your foot then back away. There are a lot of builders and renovators who think a spiffy kitchenette and a coat of paint and new tiles or feature wooden flooring will pile on extra dollars in a sale. Dont choose granite or marble as a rental. You have no idea what people can do to quality kitchen finishes until they've done it. Chipped granite? You wouldnt believe it .. but yes.
As a rental .. keep things cheap and attractive. Dont use expensive curtains or frames. Dont use nylon carpets (they are the cheapest) unless you are prepared to adopt people who dont smoke and will never use a hot iron in the living room. Use a nylon/wool blend. If you put stuff in .. make sure its stuff that is durable and frankly .. idiot proof.
If the quality is there in the initial purchase you have no issues with either the property retaining its valure or being an easy to sell property when the time comes. If there was a problem with quality to start with .. even in 20 years .. that wont change.
Thanks a lot everybody for their posts..it was very helpful.. Shahin I was looking at units rather than houses at this point in time. @xdrew, thanks for the detailed response. Will take on board all your advice.
Are you looking at units due to budget? low entry point? I would be aiming for a house if budget permits.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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