Anyone here ever bought a display home?

[Jodie701]

Stories to share?

I called an agent today to ask if he has any properties in the area I'm interested in and he said all he has available is a display home where you buy it from them and they rent it back for 12 months.

The house is priced higher then I would have expected to otherwise pay, I wonder if that "extra" money is what they just use to pay you back in rent?

 

[LeeF]

Yep, price is most likely inflated. Also, keep in mind that the house is prob over-capitalised as most displays usually are.
Easiest way to confirm is to walk into the display and find out from the reps how much would a house cost if you were to purchase it with the exact same spec as the display. Then add costs of landscaping, and other bits and pieces and you’ll have your answer.

 

[LynnH]

Jodie

Have friends who have bought a display home to rent back to the building company. Yes - prices are inflated. Yes - the 'rent' is usually built into the price.

Also it may by difficult to get insurance on display homes, so check this aspect out before you commit yourself.

If you are really interested, why don't you take the rent off the price, then knock another 10% or so off. The builder just may be serious about selling!

Cheers
LynnH

 

[sparky23]

Hi Jodie

Ask to see a schedule detailing all of the building costs etc. A display home will be built to higher specs and will cost more for that reason. I have been surprised on looking at schedules previously that the rent hasn't been factored in for the next couple of years or hasn't been factored in as much as you might expect. What percentage is being offered as this is also important. I have seen them as low as 5% and up to 12%, if you can fix a rate at a similar rate to the rate you are receiving and it is an area that should see good CG it will mean no holding costs whilst you hopefully make some money at the end of the contract. Remember though at the end the rent will fall to normal market rates.

 

[DavidMc]

Got it in one.

All of the displays I looked at were vastly overpriced and definately not worth it.

 

[joeygbh]

Got it in one.

All of the displays I looked at were vastly overpriced and definately not worth it.

They are not worth it if you are looking from an IP point of view. If you are looking to upgrade a PPOR then they may be worth it. I know the building costs (including all extras) of the display home we are moving into at the end of this year are now much higher than what we paid for it. So we won't make any money out of it, but I know we couldn't build one for ourselves for cheaper plus avoid the hassles of building. That being said, the display home next door to us has not sold, and the display is closing end of this year. I know that property has been very overcapitalised in comparison to mine.

Insurance on display homes is actually quite easy as the insurers are well versed about this practice now.

 

[Mark C]

I guess I'm a little biased actually having a display house for sale at present but there are a number of benefits to buying a display.

Yes there will be more money spent on finished due to the fact it is a display but depreciation is significant, wear and tear is minimal as nobody lives in the house, it gets cleaned every week, no property management fees, no vacancies for the first couple of years (depending on the time rented back) and often the rent is paid 1 month+ in advance and it's usually higher than if it had been put to market.

Mark

 

[wylie]

One of my in-laws bought a display home at the north coast but with no lease back period. The developer was moving their display to another area, and it was time for them to sell it, so they bought it fully furnished and will move up permanently sometime soon. Now they are using it as a weekender.

It is beautiful. I don't know what they paid, but they are tight as the proverbial so I can only assume they got a good deal. I was pleasantly surprised at their taste in furniture and fittings, mirrors and everything, and thought their taste had suddenly improved, until they told us they had just walked in, and I realised why it looked so good