By the end of the book, you will know.
- The key differences of investing in new vs old property
- Why investors fail to secure a quality property asset
- The value of quality research when choosing your property
- Costs to be aware of in both old and new property investments
- How to avoid risky ‘bargain’ driven investments
- Buying Old vs New
Buying established, older apartments is not necessarily cheaper than buying a new apartment in the same or similar location. Buying new or off the plan can afford the investor multiple advantages when depreciation and negative gearing are taken into account.
Before the investor factors in the costs associated with an older apartment such as repairs, and wear and tear on fixtures and fittings, it’s important to weight that against higher costs associated with body corporate fees in new apartment buildings and other amenities factored in.
- Buying a Bargain
It is very easy to be swayed by promises of buying at discounted prices. Inducements such as “cash back” or promises of lower interest rates are bait for the unwitting investor. Be aware of free bus tours to development projects where interested buyers are driven to projects and pressured to put down deposits. There are no bargains in the property market. Only rigorous research and due diligence will determine the true value of a property to the astute investor.
- Due Diligence
Number crunching gives an investor a financial understanding of the true cost of an investment, such as whether it is negatively geared, neutral or positive and what the impact will be on their lifestyle.
Due diligence is the research done prior to making the purchase. It helps the investor work out whether the property is a good buy or a ‘goodbye’.
Here are some questions investors fail to consider when buying property:
- What has been the capital growth of the area over the past year, 5 and 10 years?
- What is the predicted growth for the future?
- Has the property been tenanted before and for how long?
- Is that type of property sought after by tenants?
- What is the vacancy rate of the area?