Are you better off entrusting your hard-earned money into a brand-new property that guarantees higher incentives and tax & lower maintenance cost or established (old) property that offers equity building and value-adding potential?
While many factors impact the property’s market value, the decision to buy an established or new property is just one of many concerns to contemplate when purchasing an investment property in Adelaide.
Buying An Old Property
Pros
Affordability. An old property is typically more affordable than a new dwelling, which means you may be at a more insignificant risk of experiencing mortgage stress levels.
Add-value. The main advantage of purchasing an established dwelling is you can add value to the property with the renovation and boost your equity. Moreover, these renovations are often tax-deductible.
Negotiation Power. When purchasing old property, you can negotiate for a fair price. Sellers of established dwellings often have the motivation to sell relatively quickly, so you can manage this to your benefit to negotiate.
Cons
Less Appeal. Old properties generally have less appeal than new dwellings as they may have a retro design.
Lower Rental Yield. You may experience lower rental returns if the property is run down.
Maintenance. Often older properties may need repairs and upgrades due to wear and tear on the dwelling over time. It will impact your profit.
Buying A New Property
Pros
Tenant Appeal. Generally, new properties are regarded as of higher quality which means you may have more prominent tenant appeal. The reason is tenants will be attracted to modern technologies and appliances and will be ready to pay a premium. The ability to attract high-quality renters could mean that you reduce the risk of vacant periods for your investment property in Adelaide.
Depreciation Benefits. If you are an investor, the newer the dwelling, the higher the amount of depreciation available to you. Appliances such as dishwashers and air conditioners usually have a high rate of depreciation.
Low Maintenance. When you purchase a new property, you are at the convenience of not incurring ongoing maintenance or repair expenses.
Cons
Affordability Issue. Based on the property type and location, new properties are typically more expensive than established properties. It could mean that you may struggle to meet your loan repayments. Moreover, new dwellings are often associated with high strata fees for maintaining the communal facilities like pools and gyms, which could impact your cash flow.
Greater Market Uncertainty. New properties are often the first to experience a price drop when the real estate market softens. In contrast, old properties will either experience a minimal adjustment or maintain their price value.
