Old vs New: What Makes A Better Investment?

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The age of property is only one thing you need to think about when investing. Old vs New. But which should you choose? In this post we will help you decide.

There is lots to consider about when investing in property. 

Capital Gains vs Rental Yield. Tenants. Whether you're a Passive or Active Investor. Self-Managing or using a professional Property Manager. 

And now one more thing: whether you're investing in established properties or new buildings. 

Because each has it's pros and cons. So considering you need to consider which suits your investment plan.

What's Old Can Be New Again​​​​​​​​​​​​​​

Investing in established properties has advantages. 

To begin with established properties have plenty of historical data available. 

Historical data is a snapshot of how that particular property has performed in the past.

And that snapshot gives you a rough idea how that property could perform in the future. 

Location is important too. With established properties being built in places that already see a lot of demand. Also meaning they're closer to the public infrastructure that people want. 

You'll also have the advantage of having a home that is easy to add value to, through renovation and cosmetic upgrades.

Of course there are some disadvantages.

Maintenance will be more of an issue and than with a brand new property (or so you'd hope.)

Depending on the design of the home you may find it has less appeal to buyers, which may need extensive renovations to correct (or a clever agent). 

New Homes Are a Dime A Dozen

New properties are being built every day, so as an investor you've got plenty of options. 

Like with established property there are plenty of benefits to investment. 

First up the major advantage of new properties is the tax depreciation you can claim on them. 

If you've read our tax depreciation post you'll know that this is an easy way for you to save money on your investment. 

And the newer the property the more depreciation you can claim. 

Newer properties also come with all the modern advantages.

Energy efficiency, lighting, and use of space will usually be better than in an older established home. 

And what this means for you is it will attract tenants willing to pay a premium for those things, 

So while you may a more for a new build, you'll also be renting to those who are going to pay more. 

So this is worth considering. 

Maintenance of the property is also an obvious advantage, with a newer build you'll have less work to put into the property.

However, for all the advantages there are a few disadvantages.

For starters, it is harder to value add to a well built new property. Meaning that most growth will come from the natural rise, rather than any work you put in yourself. 

 Buying new builds also puts you in a slight negotiating disadvantage - the seller will have plenty of buyers, so it will be harder to negotiate a favorable price. 

And since it is a new build part of the purchase price will include the build cost - so your initial returns will be slightly smaller. 

So What To Buy?

Taking all that into consideration leaves you with one question - which do you invest in? 

Ultimately this will depend on your individual investment strategy, your appetite for risk and how much work you want to put into the properties themselves. 

If you've not prepared a strategy or considered the work required now is the time to do so. 

Get in contact with us, and we will help you get ready to plunge into property investing. 

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