The topic of new verses old or new verses established for investment properties is often discussed, and there are some pros and cons of both. Rather than delve too deeply into the discussion, I’m going to raise some important factors that people looking to invest in a dual occupancy property should be aware of.
Points to be aware of with new verses old dual occupancy:
Lack of Supply on the market: First and foremost, depending on which area you are looking at investing in; it’s worth noting that the dual occupancy/auxiliary dwelling is a fairly new concept and there may be very little or no opportunity to purchase an established property.
stamp duty Implications: there are significant savings when purchasing a new (to be built) dual occupancy over an established property of the same price. stamp duty is applicable to the land component or single contract component, and not applicable to the build contract, therefore lessening the stamp-duty payable.
Depreciation benefits: New properties have the advantage of significantly higher depreciation on the build and the added benefit of the higher rate of depreciation on the fixtures and fittings. This means there are some great taxation incentives to purchase new.
New build maintenance and warranty advantages: When purchasing a new build there are some significant reductions in the maintenance required in the early years. It is also worth noting that in QLD there is a 6 year structural warranty. This provides the investor with peace of mind that there shouldn’t be any maintenance cost blowouts or surprises.
Contemporary Colours and Trends: When building a new dual occupancy investment, it is possible to have the most up to date colours and trends. This means attractive facades and designs that have been refined to make them as attractive as possible to tenants.
Attractive to tenants: As mentioned above, by having a property that is more attractive to tenants it is possible to have the property rented faster and also to attract a higher rent than comparable established properties.
New Technologies and Modern Appliances: New technologies are being developed and incorporated into new builds. This can mean things such as better energy efficiency, better acoustics and noise reduction, more environmentally friendly build methods, as well as new modern conveniences and appliances. This all makes a new dual occupancy a more attractive rental prospect to prospective tenant.
Greater Choices: An obvious point, but one that is worth noting is the advantage of the wider range of choices available when building a new dual occupancy property. By being able to choose and have control over the design decisions it is possible to focus on making a property as attractive to tenants as possible whilst also not over capitalising and ensuring that it produces a good yield. When you purchase an established property you have to rely on the decisions made by a person some time ago which may not be attractive in the current rental market.