Tips on choosing a new build investment opportunity

Property management

If you’ve decided to invest in a new build, remember that all suburbs are not alike. Some inner city investments are priced high and offer a lower rental yield. You may also purchase an off-the-plan home and discover the quality of the building is not as good as expected. These tips on choosing a new build investment opportunity will help ensure you choose the right property at the right price and get a quality home.

Why choose a new build investment opportunity?

While there are pros and cons for buying both old and new homes, many buyers are attracted to the idea of purchasing a brand new home for a number of compelling reasons. For one, buyers may like the idea of building a brand new home that no-one has ever lived in. In other cases, purchasing a home off-the-plan can be more cost-effective, especially in capital city markets, where older and more established homes can be well outside the average person’s budget.

Older homes can also require renovations, so the idea of moving into a home that won’t require any repairs is quite enticing. So too is the collaboration between new-build buyer and would-be builder, who can work together to create a home with fittings and colour palette that suit the home-buyer’s personal taste.

While new builds can be a fantastic investment, you have to do your research and choose them wisely. Not all new build are alike, and so it’s important to compare your options and choose the right companies and builders to ensure your off-the-plan home is just as you want it to be.

Where to look for a new build investment opportunity?

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The inner city has the advantage of often being undersupplied with rental homes and apartments, but because of high prices, rental yields are often lower. Look in inner cities and nearby suburbs and you may find condominium projects being built that will lead to an oversupply of dwellings and the rental yield will fall even further. This may not be true in every instance, but these are two things you need to look into.

Rental yields can often be higher in outlying suburbs, suburbs within commuting distance of major cities and suburbs that are in the process of being developed. 5 Essential Factors to Consider When Buying a House and Land Package is a must-read article for anyone considering a house and land package. Always look out for the following:

  • The quality of the location
  • Look at the block size and decide what sized block you want: you may want a larger block so you can have a big backyard
  • Costs and financing are important factors. If it’s your first purchase, you may qualify for a First Home Owner’s Grant. Off-the-plan homes can be a great investment because you only pay stamp duty on the land, not the house and land
  • Does the home design include landscaping, fencing and a driveway? If not, these are significant extra costs
  • The builder is also important. Some builders are more conscientious than others and you will know your off-the-plan home will be well built if it is built by a good builder

Choose an off-the-plan or new build wisely and it can be a wise investment. A new build often attracts tenants who are willing to pay more for a quality home and will stay for a longer term. They will also take better care of a new property than some tenants who choose older properties because of the lower rents will.

Mistakes first time house and land package investors make

When you’re purchasing a house and land package for the first time, it’s easy to make some common mistakes. Rather than learn the hard way from the first experience, learn from the mistakes of others and avoid them. 5 Common Mistakes Made by First Time House and Land Investors outlines the most common mistakes:

  • Don’t base your investment on personal preference: base the decision on research, including the price and rental yields, and choose a home that will attract long term tenants
  • Consider who you are renting to: renters want amenities, schools, hospitals and a good transportation system nearby
  • Speak to friends and family about your decision, but don’t overlook talking to experts in the field. They will know far more about choosing the best investment property
  • Both short and long term goals are important when buying an investment property. Make sure you are able to manage cash-flow
  • Don’t “bite off more than you can chew.” Investment properties can be fantastic opportunities, but be aware that maintenance issues will come up and you may not be able to rent a property as soon as a tenant moves out. Budget for these things and make a wise new build decision

Tips on choosing a new build investment opportunity

Finding an investment opportunity requires research if you want to succeed. A real estate investment can be the wisest choice you make, but there can be pitfalls and they should be avoided at all costs.

Here are five tips for investing in property

One: When you look for a home to live in, it’s a personal choice. Looking for an investment property requires looking at properties objectively and choosing a property that will enhance your investment. You may want to look further afield for a property and choose a property in an area where prices are lower and the potential for profit is higher.

Two: Comparing properties highlights the huge difference in prices of even homes of the same size. In one area, a home or apartment may cost twice as much or more as the same sized property in another area. Look for properties in areas that have higher rental yields than other areas and consider both short term and long term goals.

Three: Always speak to experts in the real estate field. They are real estate professionals and know the market inside out. An expert will have years of experience behind them and will be able to help you choose a new build investment in the right suburb and for the right price.

Four: Any property you choose should be structurally sound. If you’re in doubt, take advantage of the expertise of a property inspector. As an amateur, you may not know all the things to look for. This can be particularly helpful if you live at a distance from a property, but need to know how structurally sound it is.

Five: Never purchase a property without considering the worst scenarios. Think about what will happen if the property remains vacant for a number of months. Can you afford to have a vacant property? If you consider the worst, you can plan ahead and weather the occasional storms that may come.

You don’t have to work alone when choosing a new build investment opportunity. Get expert advice and research the market. You can find the perfect new build investment for your budget and be on the road to a better future.

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