If you are looking to invest in property, it can often be difficult to decide which kind of property will be right for your strategy and buying rules. The decision between the house and land option and an existing property can be confusing. Here are the pros and cons of purchasing house and land and existing property.
House & Land
- Because you will be purchasing the property and the land, your purchase process is streamlined, which can mean lower arrangement fees.
- Cost. The rising price of established properties in recent years has meant they are beyond the reach of many property investors. House and land options may sell for considerably less, meaning they are a good option for first time investors looking to enter the market.
- Equity. There is potential that you could create instant equity in your new property. Purchasing a house and land package enables you to lock in labour, land and construction costs. If you are buying in a rising market, it can mean that by the time your property is built it could already be worth more than you paid for it.
- It is a clean slate from which you can build the ideal property for your purposes - whether you intend to rent it out or live in it yourself
- All features, fixtures and fittings will be modern and brand new. This means they won't need to be replaced or updated in the near future saving your maintenance costs and lowering your expenses. They also tend to be more environmentally friendly, reducing power costs and your carbon footprint
- New properties are very favourable for potential tenants, who may prefer a new modern property, helping to lower the time your property will be vacant.
- New property can be eligible for higher depreciation deductions
- As house and land developments tend to be in areas that are still being established, you may have to compromise on location
- There may be building delays due to weather or availability of building materials
- You may need an additional budget for landscaping, driveways and fencing
- There may be uncertainty concerning the final bank valuation, how the completed area will turn out, and the kinds of properties will go in surrounding your block.
- More choice as to location and neighbourhood of property to purchase in.
- Pre-established driveways, landscaping, fencing and yards which won't need to be added later at a further expense.
- As long as the property is inspected before purchase, you know what you are buying at the time of purchase
- Depending on the age and condition of the property, it may need repairs
- Again, if the property is older, you may need to upgrade and renovate parts of the house such as the kitchen and bathroom in order to make it attractive to tenants.
- As the property has been built to it's previous owners tastes and requirements, there may be aspects of the property you don't like or aren't suited to your needs.
In conclusion, there is a lot to consider when deciding whether to invest in an established property or to buy a new house and land package.
After weighing up the pros and cons of each you must then take into consideration your goals and motivations.
Will you be living in the property?
Do you need to be close to the city? Will you be renting it out?
If it's an established property does it need a renovation in order to be attractive to potential tenants?
It may seem complex, but we can help you make this decision. Book a free consultation today and learn how our end-to-end solution can help you purchase your next profitable investment property.