Do you buy new or established house?
- Thread starter wll6568
- Start date
We buy old, then build new townhouses.
Reasons for new are:
Instant equity growth.
Low maintenance issues/warranties provided.
More attractive to tenants attracting premium rents.
High depreciation, (great for high depreciation for our high incomes).
Reasons for new are:
Instant equity growth.
Low maintenance issues/warranties provided.
More attractive to tenants attracting premium rents.
High depreciation, (great for high depreciation for our high incomes).
Please share your thoughts and reasons
What are your thoughts?
Part of our purchasing criteria is to acquire near new IP because that's what our chosen property investment strategy dictates.
We've been purchasing near new property over older style property for several reasons, the main ones being (in no particular order) -
1/ To maximise our Non-Cash depreciation deductions
2/ To minimise our maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential vacancy rates
4/ Ask a higher rent - thereby Maximising yields
Right now I definitely buy old, tired looking, but structurally sound homed that I then do minor cosmetic reno (paint, carpet, drapes etc) and let out.
Sometimes I skip the reno part, like if there's a sitting tenant, or those no obvious work to perform.
I agree with the fact that you can see all the flaws and have the potential to add value instantly.
Cheers,
Dwight
Sometimes I skip the reno part, like if there's a sitting tenant, or those no obvious work to perform.
I agree with the fact that you can see all the flaws and have the potential to add value instantly.
Cheers,
Dwight
I have been buying old and renovating/building granny flats.
- Cheaper buy in;
- Manufacture growth;
- Ready to rent;
- Higher ROI.
I am however looking to utilise 2 strategies.
1. Buy, subdivide (not necessarily build).
- Higher lump sum profit in shorter timeframe;
- Turn money over quicker.
2. Buy and build.
- Higher manufactured growth;
- Less maintenance costs;
- Higher depreciation.
This ONLY works for me because of the former strategy where I built up my contacts and equity.
- Cheaper buy in;
- Manufacture growth;
- Ready to rent;
- Higher ROI.
I am however looking to utilise 2 strategies.
1. Buy, subdivide (not necessarily build).
- Higher lump sum profit in shorter timeframe;
- Turn money over quicker.
2. Buy and build.
- Higher manufactured growth;
- Less maintenance costs;
- Higher depreciation.
This ONLY works for me because of the former strategy where I built up my contacts and equity.
Building a new ip can be a really good strategy as well, if you can get the land at the right price, and control the price of the build . You can then create equity straight away! Be careful that valuation stack up, it is important to research your targeted area well
I've been having the same discussion about what to do for the next IP, old, new or off the plan.
I think the capital growth is in older properties with less to depreciate but more land value.
However the large depreciation deductions of the newer properties is nice for tax too.
But when it comes to cashflow, I am leaning even more to newer properties. It's hard to get money out of an IP tax-free or interest free while it's growing, but that's what depreciation gives you without affecting your loan. It's almost like needing a smaller deposit because you get some of that deposit back over the first years as depreciation.
I think the capital growth is in older properties with less to depreciate but more land value.
However the large depreciation deductions of the newer properties is nice for tax too.
But when it comes to cashflow, I am leaning even more to newer properties. It's hard to get money out of an IP tax-free or interest free while it's growing, but that's what depreciation gives you without affecting your loan. It's almost like needing a smaller deposit because you get some of that deposit back over the first years as depreciation.
We moved around so much and only occasionally bought as PPOR which always turned to IP's when we moved on. 2 were great, one nearly ate up half the great result.
Saved for years, did nothing, young kids, moving etc
Strategy was to buy houses with potential, either because it had land or could be extended. Eventual aim to live off rent.
Bought duplex house on 822 block intending to convert to 4. Getting demo has changed our entire plan to now pretty much putting all our eggs in one basket and have just recently lodged DA for 13 units.... A strategy most would not advise I expect !! Our 'strategy' is now more of a fingers crossed approach
Saved for years, did nothing, young kids, moving etc
Strategy was to buy houses with potential, either because it had land or could be extended. Eventual aim to live off rent.
Bought duplex house on 822 block intending to convert to 4. Getting demo has changed our entire plan to now pretty much putting all our eggs in one basket and have just recently lodged DA for 13 units.... A strategy most would not advise I expect !! Our 'strategy' is now more of a fingers crossed approach
Newbie buy, yes. A seasoned investor would build I believe.
