what are the cons and pros between investing in an off the plan vs renovating a 30 years old property? which is a better investment strategy? I know off the plan properties have a large depreciation in the first few yrs which can help minimise the tax. However, I think this is more like a buy and hold approach where you are hoping the market to go up and make a profit by capital gain. Renovating a 30 years old property is more like an aggressive approach where you are looking to make a profit under 6 months. Can you still get a massive depreciation in the first few years for a recent renovated property?
Also, does structural renovation apply to house only? What if you are buying an unit and trying to renovate it? I guess you can only do a cosmetic reno max since there is no way to change the building structure for a unit. Does that mean the gain is limited in some way after my reno?
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This topic was modified 9 years, 7 months ago by
asou.
Depreciation really should be considered as the icing on the cake, not the fundamental driver behind a purchase. OTP can be fraught with issues (overpriced so they fail valuations and no means of backing out of contract, long delays (I’ve seen investors stuck in contracts where they will most likely NEVER receive the end product or their deposit back) etc.
Personally I prefer properties in a tightly constrained area and if they have renovation potential which can create sweat equity, EVEN better! You can certainly renovate units/apartments too, but you need to follow the strata bylaws. Also note that valuers will need to compare against others in the complex/other complexes so it can be difficult to gain significant value increases compared to standalone houses.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Corey,
Thank you so much for your information. I am completely new to property investing. I have always wonder how does the financial institution evaluate the market value of the property? Is there a set and stone formula somewhere that is known to the public? If I go to a different institution, will the estimate value of the property differ?
Generally the properties are valued by a valuer (they do not work for the bank, but are instead contracted to value properties individually). The process is fairly simple – the valuer assesses the property in question through a lot of it’s variables (property size, type, block size, fitout, location etc), and then compares it against other properties in the area which have sold recently. They will generally rank the properties against one another saying whether they are superior, inferior or comparable. From there an estimation of value is determined.
EG
An inferior property sells for 250k
A superior property sells for 300kThey may determine that the property being valued is worth circa 275k, especially if they can find similar properties selling for this figure.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Corey,
Thanks again for your valuable information.
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This topic was modified 9 years, 7 months ago by
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