Why new builds make the ultimate investment properties
In 2009, the median house price in Auckland was around $450,000, according to the Real Estate Institute of New Zealand. Fast forward just over 10 years to today and the median property price in the City of Sails has nearly doubled to $890,000.
These numbers tell us that the best way to create wealth with property here in Auckland is to buy and hold long term. A brand new home is the best way to do this – here’s why.
Lower ongoing costs
When they’re built by an experienced, high quality builder, new properties last longer and require less maintenance, especially in the first 10-20 years. You also know exactly what you’re buying and there’s no chance of discovering expensive problems with the home’s foundations, roofing or building materials after settlement like there so often is with existing homes.
This makes new builds a great option if you’re looking for a rental that provides consistent cash flow without any nasty surprises.
Building an investment property allows you to tailor it to what tenants want.
Better tax deductions
When you buy a new property, it’ll be full of brand new chattels that can be depreciated over 5,10 or 20 years to reduce your tax bill. Because the chattels are brand new, the amount of depreciation you can claim may be very high.
On the other hand, if you buy an older property as an investment, the chattels may be in used condition and offer less tax benefit. If you purchase a new investment, it’s well worth talking to your accountant to make the most of these perks.
Higher quality tenants
Your rental investment is only as good as your tenants. Since they’re comfortable to live in, newer properties tend to attract higher quality tenants such as professionals and families who often stay for longer. Again this helps ensure that new properties provide stable cashflow for investors.
A high quality new home will attract high quality tenants.
Easy to finance
When you buy a new home from a builder or developer, you’re exempt from the loan-to-value ratio speed limits imposed by the Reserve Bank. That means, in most cases, you’ll be able to purchase an investment property with a 20% deposit, rather than the 30% you’d require if you were to buy an existing property. This makes new homes easier to finance.
Buying a new property isn’t a sure-fire road to riches for investors. You’ll still need to do your homework and buy in a growth area where there’s demand for new property and rentals. With that said, if you buy a quality property in the right part of Auckland, new builds are a long-lasting, high quality asset that provide reliable cash flow with lower costs. This makes them easier to hold in the long term so that you can make the most of those awesome Auckland capital gains.
Are you looking to expand your investment portfolio? Give the team at Golstruct Homes a call today and let’s talk about how we can help you build your wealth.