What makes a good investment?

20 Feb 2020

There are a lot of different opinions when it comes to what is a good investment.

New builds, renovators, developments – or perhaps the age old debate of units versus houses? The truth is, there is no one-size-fits-all solution when it comes to what makes a good investment.

In this blog I want to focus on new builds versus an established property.

The performance of an investment property is something that each person looks at differently. For some it’s a strong rental return that provides positive cash flow, for others, capital growth. Here are some positives and negatives of each:

New Builds

Positives

  • Low Maintenance investments are perfect if you don’t have the additional funds to be renovating or doing maintenance
  • Tax benefit of being able to claim the depreciation
  • Sometimes you buy land as well as build, which means you can build what you want or what the tenants in the area might want

Negatives

  • Generally, like a new car, you often pay a premium for the brand new factor
  • Often, slow growth in the first property cycle due to oversupply in these new green field development areas 
  • Often on small blocks of land
  • Often a lot of the surrounding properties are investor-owned, which can mean oversupply of rentals

Established Properties 

Positives

  • Often in built up areas with a limited chance of oversupply flooding the market
  • Perhaps on larger blocks of land from an era where land subdivisions here cut up into bigger lot sizes
  • Scope for future value adding

Negatives

  • Limited options when it comes to purchasing – when you take away busy roads and flood areas, and if you are focused on a specific location you are also limited to what’s available at that time
  • Maintenance in older homes – like anything old, there is a need more ongoing TLC to maintain the home

I personally gravitate towards established. I love the scope to add value through renovation rather then having to wait until a brand new property grows in value. Plus, renovations allow you to create your own tax depreciation by doing renovations and improvements, which then means you can get the best of both worlds.

Sometimes having an advocate as a buyer, known as a buyers advocate, can make this choice simple. If you need advice on finding the perfect property, our experienced Brisbane buyers’ agents can help. Get in touch today.


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