Investing In New v’s Established Properties

New and existing properties each offer advantages and disadvantages for investors. To determine which is right for your investment strategy, you need to understand what makes each option unique.

New Property Investments

Investors who purchase new properties may be able to claim depreciation advantages, which may be tax deductible. Also, you can depreciate the building itself.

New properties often come with lower maintenance costs and may be more attractive to tenants, who are prepared to pay higher rent.

If you’re weighing up the different ways to enter a market and investing in a new place appeals to you, it’s worth considering these investment options.

House & Land Packages

A house and land package could be an effective and hassle-free way to build a new property. Select a block of land in a new development, then choose your preferred home design from a range of builders.

When purchasing a house and land package, you may find that the properties are located in developing suburbs or new estates. Be sure to check that the location offers facilities such as schools, shops and transport links that will appeal to tenants.

Buying Land In Australia

Buying land and building later offers the freedom to choose your location and design the residence to your specs. It may also provide financial rewards.

For example, some states may only charge stamp duty on the value of vacant land. So you don’t pay stamp duty on the value of the dwelling you build down the track. You should check with your state or territory to find out more about this.

It’s important to take into account all costs when planning a new home, including those associated with the land. For example, a sloping block may be more expensive to build on, as it might require a custom-built residence that works with the land’s gradient.

Buying A Property Off The Plan

Buying off the plan consists of buying a property before it is built, such as an apartment.

In some circumstances, it’s possible to save on stamp duty by buying a newly built home. Developers may also offer discounts and other incentives to early buyers in a competitive market.

However, there are also risks in property development. The property market may fluctuate during the construction period and it could mean your property is worth less than you expected on completion.

Newly Built Property Financing

When building a new dwelling, you may need to secure two loans – one for the land and another to build the residence. Some lenders can bundle these together. Or speak to a My LMI Group broker about the loan options that work for you.

It’s also important to speak with a tax professional before beginning your real estate investment, as you may not receive rental income while building is underway—a factor that could impact your cash flow. Knowing how to manage this situation is an important step toward successful investing.

Established Property Investing

There are a number of benefits to purchasing an established property. There’s no guesswork or stress involved in building a new place, and it may already be tenanted when you buy it, which can mean an immediate rent return. This can be an advantage for your cash flow.

You may have a number of different property types to choose from when deciding where to live.

House vs Apartment Investing

When it comes to real estate, sometimes apartments are more affordable than houses. Also, they may produce higher rental yields than houses. That’s good news if you have a tight buying budget.

Units have other advantages. They may have lower council rates and maintenance requirements. But you may need to pay body corporate fees and strata levies. These costs go towards maintaining common areas such as gardens, pools and buildings.

Strata Title vs Torrens Title

Torrens titles, also called freehold titles, are typically used for standalone properties like houses. This means you own the whole property including the house and land.

Strata title is a property law that applies where there are common or shared areas. Condominiums, apartments, and townhouses usually fall under this category. Buyers own the interior of their unit but not the common areas, which tend to be collectively owned and managed through an owners’ corporation.

Semi-detached Properties vs Duplexes

A duplex is a single dwelling made up of two separate homes. The two homes share one common wall and are part of the same property, but may have separate titles. A semi-detached house sits on its own block of land. Unless each home has its own title, they cannot usually be sold individually. This is something to consider as it could make the property hard to sell.

Deceased Estate Properties

When property is sold as part of a deceased estate, it could be an opportunity to purchase property at a bargain price. However, you should know that there are potential downsides to buying or inheriting a deceased estate property.

It’s important to check the title of a property before buying it. In some states, a property cannot usually be sold if the deceased person’s name appears on the title deeds. It may take time to change the name from the deceased person to the surviving spouse or estate’s executor. It is advisable to consult your legal rep about this issue at an early stage.

When a property is part of a deceased estate, it may need repairs or an extensive makeover before it can be rented out. Be sure you have the funds available to do work to bring the dwelling to safe and modern standards.