Hi all. I just have a few questions in regards to Real Estate. I wish to purchase my first ever investment property over the coming months. I am eligible for the FHOG scheme; however, am contemplating just setting it as an investment property to get rid of all the hassle. My budget is anywhere up to $330,000. My two questions are: Is older houses or newer houses (such as Off The Plan or H&L packages) better for investments? and can you recommend any good capital growth areas for NSW? Thanks in advance
you want a place that is not going to fall over tomorrow. that said, if you can find a sturdy older place, I would suggest this is better. Think of buying a motor vehicle. You buy it brand-new and it depreciates 50% in the first year. I suggest the same thing happens with the building. An older building probably has less to depreciate. when the value of the building reduces to its minimum, what you pay for is the value of the land. Land is what appreciates, very rarely will a building appreciate in value and what will add value to your portfolio. Hope this helps.
... but unlike a car, if the property is for investment you can claim the depreciation loss against income. Newer properties generally provide a greater level of depreciation to claim (helps cash flow), but that is one consideration that should never override whether the property is a good investment or not. An older house in an established and more central location can prove better than a new house on the edge of suburbia (in growth terms). The value is in the 'land', but the location of that land can be more important than the size. If you're getting the FHOG, you may need to live in it for a minimum period - mentioned somewhere in another thread with more detail. But it may mean that you don't have the ability to 'simplify' if you weren't thinking of moving in. Dave
Hi Kael Remember that even if your first purchase is an IP you can still claim the grant when you do buy your PPOR but, unfortunately, you won't be entitled to any stamp duty concessions. $330K isn't a huge budget but it will acquire you a unit or house/duplex in many Sydney suburbs- you need to narrow it down or else get a property professional to assist you with this so you can focus on one or two areas. Most suburbs (especially houses) are going to be in the middle to outer ring suburbs ie: think western, southern and far northern. Regional areas are quite different- I can only comment on places I know but try the Hunter Valley for housing in your budget. I've had IP's in Singleton and they've performed very well for me over the years. Though there's only one left now, I've had very low vacancy and great tenants with no issues whatsoever. House is probably worth about $280-300K now and is a nice little home, though older (approx 40yrs) and is returning me a positive cashflow every week. As far as old vs new goes, that's a decision that your budget is going to make for you - but you need to consider that it's going to be largely units for your money here and all costs do need to be accounted for ie: strata fees on new builds can be quite expensive, especially with the new laws now requiring all strata plans to have sinking fund forecast plans as part of the package. Lots to think about, and I encourage you to read forums such as this one and ask lots of questions of other investors. Also try to read (Jan Somers books are a basic good start) property books to widen your knowledge. Happy researching!
