Longterm strategy-Buying large land with depreciated house vs New town house

Quick update. I spoke to one of my advisers about the townhouses. In his view, he said the main problem is they are usually located in secondary locations, i.e. on busy roads and so on. They'd be awesome if you could get one nestled in a quiet little leafy street but there's very few of them around (unless they were built 20-30 years ago). Anyway, that was his 2c.

 

No worries at all, I have been reading these forums for over a year, and actually have you to thank for finally getting the motivation to register and post!

I just still feel that between the negative gearing and the CGT discount, there should be an opportunity to get better returns (though the change from 4% dep to 2.5% probably made a big dent to this).

I guess it's still back to doing a thorough due diligence and evaluating each potential deal on it's own merit,

 

More important for us is that the median house has gone up 46 times its value since 1970 whilst the land component has gone up 150 times its value.
Property Market Update July 2018 by John Fitzgerald | Custodian.com.au

 

@sash can you express your opinion on this topic buying new vs old/established?

 

I have done both...but I am getting very tired of my older houses.....the maintenance does add up....and if you are not cashed up it can bring you undone if you have a large portfolio.

I have very little issues with newer properties.....

 

If you are buying today @sash would you still continue deploying your strategy of acquiring land and source the build yourself, over purchase existing house on block of land? Would you still continue to do this even though we can see we are entering a slower growth phase in general?

Keen to know your thoughts.

Cheers,
David

 

Thanking you, interesting

 

Sure wood....the older places will need maintenance....some of mine need 20-30k fo work...which I am fixing up 1-2 every year.

 

the maintenance costs of old houses can be a real killer,

if ppl has a large portfolio ( 7-10 IPs), cash buffer could run dry fast.

worse, if PMs are not that competent.

 

Same here and it sucks dealing with it!

 

You need to build in the maintenance cost into the net yield
If the property has large outgoings you just need to allow for it.
If you have a median size portfolio (say net rental of $2-$3m pa ) the maintenance will even itself out over the years (I find it averages about 7% to 8%.)
On a small portfolio of say under $1m pa the maintenance can vary a bit from year to year.
Key is to get a good spread of assets that vary in characteristics.

 

Yep...I made the decision to go for new stuff now....

Have factored these costs in...but it is time consuming ...

 

Hey mate,

In today's date, would you still go for old properties or completely focus on new ones?