Buying new vs. established
It’s the age-old question - Do you buy an established or brand new property for investment purposes? There are always pros and cons to both but in this blog we will outline the benefits to buying new vs. buying established.
We have whittled it down to three of the biggest factors to consider when buying your next investment property. Its important to note there are more then these three but these points hold the greatest influence.
- Depreciation – When you buy a new property for investment purposes you can maximize the depreciation benefits, which in short means more savings to you, the investor. What is depreciation? It’s reduction in the value of an asset over time, due in particular to wear and tear. The Australian Tax Office (ATO) has a policy that allows you to claim ‘depreciation’ benefits. This process is completed annually and this tax refund helps with any potential replacement or maintenance issues that may come up.
- Maintenance – On the topic of maintenance. This is where a new property construction has its biggest advantage. All items within the investment property are new and subsequently less likely to falter and put you out of pocket due to the ensuing repairs. Also, the insurances that comes with all the products gives you peace of mind as you move forward. Nothing would be worse then purchasing a property and two weeks later the hot water system decides to no longer work. It would be a costly exercise to replace.
- Higher rents – This rule of thumb has proven it's self time and time again in our industry but it must be said it can depend on your location. Generally speaking, a new property will fetch a higher rent due to its appeal of new appliances and no wear and tear.
Investing in property can be a daunting process and as such it is always prudent to make it as stress free as possible. Established properties are a solid investment option and should not be dismissed entirely. Everyone person’s circumstances are different and it is recommended you seek professional advice before embarking on your property investment journey.