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Investing in a house and land package vs pre-existing properties

25/06/2019
Investing in a house and land package vs pre existing properties

Property is often praised as one of the most reliable and bankable investments. While it may be hard to get into the Australian property market initially, the long-term rewards are worth it. 

Two of the most popular options for getting into the property market are buying a pre-existing property or purchasing a house and land package. Both options have their pros and cons. It’s up to you to decide which option best suits your investment goals. 

You may want to purchase a property for the sole purpose of renting it out. Maybe you’re looking to buy a property with the intention of selling when it’s value has increased. 

Familiarise yourself with all the pros and cons for both property investment types, and you’ll be able to make a confident and informed decision about your next property purchase.

Vist The New Bloom website to find a new house and land package for your property portfolio.

 

Design options

Having control over the design of your investment property enables you to add significant value to it. If you’re looking to turn your new property into a rental, there may be certain features you want included in order to make it more appealing to tenants. 

Depending on where your property is located, there may be certain design constraints put in place by the local council. There’s also the cost of redesigning a property you need to consider. Are you financially prepared to cover the costs of a redesign?

 

Pre-existing property

Depending on the condition of your pre-existing property, you may have limited options for redesigning. A small house could easily have an extension added to it if the block of land is big enough or if its foundations can support an additional storey.

Demolishing your property and starting over with the design is another way to get what you want. So if you’re unhappy with the design of your existing property, be prepared to cover the costs of a redesign. Demolishing and renovating can easily exceed your original budget for an existing property.

 

House and land package

Purchasing a house and land package can give you the option of choosing the design features of your new property. Property developers often provide several property designs to cater to a wide range of property buyers. A property developer will also ensure that the local council approves the house designs available.

Another fantastic feature of buying a house and land package is that everything is brand new. You won’t have to worry about dealing with renovating or extensions because the house has already been made to the specifications you chose. A set design ensures the cost of your house will stay the same, which makes it easier to budget for.

 

Financing

Your finance options available for new and existing properties can be vastly different from each other. Due to the nature of how house and land packages are built, you won’t have one initial mortgage that pays for everything. 

Your options for getting finance on both property types will also depend on your status. Are you a first-home buyer, or are you a current property owner looking to add to your portfolio? Factors like your eligibility for a first home buyers grant or current property portfolio will affect  what loans you can apply for.

 

Pre-existing property

Depending on the condition of the house, you may find it hard to get financing from major property lenders. If your house is in poor condition, a lender may hesitate to give you a loan because they know you’ll need to take out additional loans for renovations. 

Private lenders tend to be more flexible with offering finance for properties. Consider approaching a private lender that is likely to have more customisable options available to you. 

 

House and land package

House and land packages tend to have multiple options available for financing. One example is having two loans, one for the mortgage on the land and one for the construction. You’ll find some property developers will give you the option of bundling the two loans together or paying for them separately.

Because all the fixtures in your property are new, you will be eligible for depreciation benefits which enable your property to be negatively geared. Through tax refunds, your property can then be flipped into positive returns. When your property is in positive cash flow, you can save on tax by claiming depreciation against the income you’re generating from the property.

 

Make the best decision for your future

So when it’s time to decide what type of property to purchase, choose an option that caters to your future investment plans. Consider the flexibility you’ll have with both property types. 

If you’re looking to renovate down the track, choose an existing property with room to grow. Maybe you’re after a more low-maintenance option? A house and land package is the perfect choice for those who know exactly what they need in a house design.

Weigh up your options and pick a house that suits your design and financial requirements. After making an informed decision on an investment, you’ll be happier and more confident with the choice you made.

Visit The New Bloom to find a home design that’s right for you.