This is a mind drumming one for me but most probably a simple one for the experts. Okay here goes guys. I've found the area im interested in and have watched the growth for about the last 10-12 months and it has been significant (if only i could of bought last year) Okay the question is where abouts in the area do i buy i've basically figured out where the CBD is , the schools, TAFES parks , hospitals and roads would be. For this particular area they are in the first stages of relifting and creating a waterside precint n on the other hand there is a new 47 home estate being created pretty much on the edge of town . Some older homes adjacent the future water precint range from $99000-$135000 (closer to CBD etc.) and land only is going for $80,000-$90,000 in the new estate. I guess i could buy at the lower end of the market near the water and get around 7-8% yield and if i buy in the new estate i'm only paying for land plus i need funds for a new house on top of that i wouldn't know what kind of return i would get. Basically i'm looking for as close to neutral or poisitve gear with growth. I think for this situtation i would choose the older established housing near the water and CBD compared to buying and building a house in the new estate abit further out of the regional city. What do you guys think? Where would u expect more return and potential for future growth-Old home near the water and CBD or new estate land and home on the edge of town? I guess i would new more starting funds and holding costs for the new estate homes compared to buying an established home which would be rented out from the word go.
Do your calcs on new.
Far greater tax advantages and more tenant appealing.
In a new estate you might even negotiate 'builder' terms i.e delayed settlements etc
Sometimes you also have instant capital gains.
Obviously stamp duty savings on a new home as you only pay stamps on the land not the house and then you have depreciation which would be far better in a newer home. Have a loook at what ameneties the new area has or is going to have and how long it is going to take to get up to scratch, as this can cost you huge capital growth if the area lacks shops, schools, community feel. Be wary developers will tell you anything to get you to buy make sure its in writing. When costing a new home dont forget landscaping, driveways, footpaths, window coverings etc On the other hand you have an existing area close to all ameneties and water and your only spending $30,000 to $45,000 for the house, add another $20,000 for a reno and you've got yourself a good investment no building time maybe an 8 week reno if needed. I will always buy where there is less land as this is the asset that appreciates not the house, so the tighter the area is for land the greater the cap growth long term….
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