Whether it is your first home, upgrade or for investment purposes, taking out a construction loan to build has a feeling unlike anything else in property ownership.
Therefore it’s not hard to understand why buying a newly built home or investment property is a popular purchasing choice for many Australians.
One of the most attractive aspects of buying new is that it often requires fewer upfront costs. Many unforeseen costs, maintenance fees or repair bills, can quickly eat into the money you aim to save by purchasing an existing dwelling.
Moreover, newly built properties traditionally carry a warranty of several years so if you do happen to run into teething issues with your new home, the warranty can help. If you are in the market for an investment property, a new home can certainly be a wise choice.
New construction loan benefits for investors
Not only will the new look and design appeal to potential tenants, contemporary building standards can mean a greener, more energy efficient property. Also keep in mind that new utilities and appliances, such as bathroom, kitchens and heating can be a huge draw card for tenants and should be considered when you come to negotiate the weekly rent.
Finally, don’t overlook the depreciation and taxation benefits associated with a construction loan for an investment property as well as the government incentives that can come with purchasing a new home to live in.
Benefits are often at their greatest when a property is brand new. For example, government bonus schemes such as the QLD Great Start Grant provides eligible first home buyers with $15,000 towards the cost of the construction, there are also stamp duty concessions for the purchase of the land.
Things to consider
There are many advantages to buying a new property over an existing dwelling, but as with all property-related decisions, caution is necessary. To minimise risks, consider the following before making a purchase:
Capital growth is NOT guaranteed, whether you purchase a new or an older property.
Research is essential, be absolutely certain to do your homework on the property market and purchase in an area that is more likely to offer growth potential.
Know who you’re dealing with, unfortunately, there are several stories of developers who go bust during a development or turn out not to be professional operators. Take note of the developer’s history and speak to family and friends about developers they have used in the past.
New and older properties both have their pros and cons and whether a new property is right for you is ultimately down to your specific situation. If you’re not sure, getting professional advice would be a good next move.
If a new construction loan does fit your financial and investment strategy, however, the benefits should be considerable.