Should you invest in a brand new or old property?
It’s an age-old question that divides people: to invest in an existing (old) property or a new one?
Both have their fans who swear by their favourite investment option.
Whether you belong to one camp (invest in new property) or the other (buy an old property), it pays to reconsider and review the upside and downside of each. For many people, it may be just a question of timing or for some, it could be a case of sticking to your preferred property.
Pros and cons of buying a new property
Pros
· Nothing beats the excitement and uplifting feeling when you get the keys to a brand-new property where everything is shiny, neat and beautiful
· Most tenants prefer a brand-new accommodation over an old one
· You can just move in and live in the property or have your tenant move in immediately
· The property can generate an income right away if you have signed up a tenant
· Potentially higher valuation if you want to take up another loan to build your property portfolio
· Depreciation and other tax benefits that can be claimed during the first 5-10 years of the property
· Low maintenance cost
Cons
· Limited opportunity to add value – even if you want to add some extra features, most brand new developments have pre-set components that go with the package
· Could cost a bit higher (than an old property) because it is ready for occupancy and there’s no need to change or renovate anything
From our perspective here at Wealthi, we have anecdotal evidence from clients who attest to the benefits of their investment in brand new properties. Whether they’ve bought in Sydney, Melbourne or Canberra, many property investors have seen the value of their brand-new properties appreciate over the past two years.
Pros and cons of buying an old/existing property
Pros
· Opportunity to add value – by doing your own renovation to an old property, you can add value to it even if you have a limited budget.
· May be reasonably priced depending on where you buy it. Though it is not always a given that an old/existing property is cheaper than a brand new one
Cons
· Renovations can take time, money and lots of effort and can cause a lot of stress
· Any renovation you make may not suit the taste of potential tenants
· Higher maintenance costs due to ongoing repairs
· Low rental returns
· Less appealing to tenants (who prefer brand new accommodation)
· Low depreciation and tax write-off benefits
If you would like to discuss the Australian property market in more detail or know our open opportunities reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.
