A question which has plagued property investors across the world is whether it is better to buy a new property or an old property. New properties offer tax incentives but older properties can often be greatly improved with renovations, increasing their value rapidly. There is no definite right or wrong answer as it depends on each investor’s aims and goals with the property but there are distinct advantages to both.
The following 6 point guide will help you decide which property investment is best for you.
3 Reasons Why New Property Provides the Best Returns
- When you own an investment property you are able to claim depreciation of items such as dishwashers and washing machines. Carpeted floors and furniture all have relatively high rates of depreciation and when you own a new property you can claim higher rates on the depreciation of such. The amount of depreciation you can claim depends on the age of the property, so owning a new property will allow for better tax benefits from your investment.
- Tenants will often prefer to move into a new property rather than an old one. If you are buying to rent then a modern property has a greater appeal. Particularly in coastal areas overlooking the sea, modern properties will fetch a greater rental rates from tenants, making newer better.
- There are now builder regulations in place which mean they must supply insurance for any properties they build. This means that if anything happened to the house then you would be covered. It also offers the opportunity to claim back from the builders if you discover that they have failed to meet the specifications of the build. This will provide you with peace of mind at being covered if you discover problems with your property after purchase.
3 Reasons Why Old Holds the Gold
- When buying an older property it is important to consider the value of land and building costs in the area. You will find it easier to get permission for a renovation than for a complete rebuild. Managing this sensibly will enable you to create an instant equity increase on the property. Make sure you do the calculations to ensure you are going to come out with a greater equity increase than the value of the investment.
- Older buildings amongst other older properties have a certain appeal because of the atmosphere. It is difficult to replicate the feel of an older suburb when creating new property areas. The appeal of the surroundings will ensure a maintained demand in the area which cannot be guaranteed in a new development.
- Older properties often have hidden attractions which you would not find in a newer property. Elements such as solid oak flooring hidden under carpet could really increase the appeal and value of the house. When looking to buy an older property, ask questions about the original features and you may be able to unearth some hidden wonders.
The Research Element
When looking to buy any property it is always necessary to do a lot of research. This is often more true with older properties, but knowing the area, the potential for expansion nearby and the accessibility of the property, will place you in better stead to discover the best buy in your chosen area. Be sure to utilise property valuation software to discover the true value of a home before making any offers.