Build or Buy Existing.....

[miximitosis]

Hi all,

Been browsing for some time now and thought it was time to sign up! I've read a few books now (McKnight,Lomas,Yardney) but have a question relevant to the present FHOCG on offer in Queensland.

As I'm sure some you are aware, first home buyers in Queenland currently receive no benefits for buying an existing dwelling yet receive $15000 construction grant and no stamp duty.

I maybe leaving out too many variables for you guys to draw your own conclusions but my question is, should I;

a)Build a new home on land for approx $350,000 pay no stamp duty and receive the FHOCG. Then approximately 12 months later move out and turn it into an IP returning approx $380-420 rent and getting the tax depreciation benefits of a 12 month old property. I would then rent another property to live in while the equity grows and saving for another IP.

b)Buy an existing property (cheaper perhaps? unit?) and continue renting where I am. However I will receive no grants and pay stamp duty.


I'm not really comfortable investing outside of Townsville (where I live) yet as I would like to get a feel for the whole property investment thing close to home before I broaden my horizons. Due to this, yields and growth are quite even throughout the region so at this stage I'm more set on building and living in it for 12 months to get get the most of government incentives.


As I stated earlier I may be leaving to many variables out for you guys to give informed advice, but any suggestions?

 

[MichaelW]

It really comes down to a commercial decision. Like anything new, cars in particular come to mind, you pay a "brand new premium". You need to weigh up whether this premium exceeds the incentive discounts you're offered to buy new.

My guess is it would. But if you do a proper assessment in the area you are purchasing comparing new with virtually new, you'll get your answer.

Good luck,
Michael

 

[UltraProperty]

There are other factors to look at. But sometimes buying existing is better as the land value the the current will be much lower than replacement cost. Building new generally attracts a premium unless you able to secure land and construction at a lower rate of compared to other new homes on the market.

 

[miximitosis]

Thanks for the input Michael. I'm guessing the only way to tell the 'premium' is to compare to similar properties?

There are other factors to look at. But sometimes buying existing is better as the land value the the current will be much lower than replacement cost. Building new generally attracts a premium unless you able to secure land and construction at a lower rate of compared to other new homes on the market.

Thanks for your input also ultra. I don't quite follow the sentence about the current land value/replacement cost though.







Another side question, if I were to choose to build is it possible for me to ask the builder to leave out say the aircon install and tiling and get my tradie mates to do the work mates rates? Would there be much gain in this or would they then manipulate the costs elsewhere to still get the same amount of dollars out of me?