New v Established

Discussion in 'What to buy' started by Mark Daynard, 13th Dec, 2020.

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New or Established for Investment Property

  1. New

    8 vote(s)
    12.7%
  2. Established

    55 vote(s)
    87.3%
  1. simplevalues

    simplevalues Well-Known Member

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    4th Nov, 2020
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    Location:
    Sydney
    Yes cosmetic renovations are still ok but first time investors won’t have a lot of money for renovations hence are attracted to something new I believe ...
     
  2. Pearser

    Pearser New Member

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    24th Jul, 2016
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    Location:
    Perth
    Excellent point. However, for a first-time investor, it is really difficult to see what is not attractive about new-build investments.

    Thanks for sharing your experience. The property I am actually looking at is in that region. I am seriously reconsidering my options.
     
    Lindsay_W likes this.
  3. Pearser

    Pearser New Member

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    I was not aware of this. Thanks for the information. That is a serious consideration for anyone who thinks they have an easy exit strategy if the IP doesn't perform how they expect in the first few years.
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Most of these new builds in this area have issues with the values, bank valuations keep coming in $20 - $40k less than purchase price this is usually the point when the penny drops for a first time investor/first home buyer.
    The problem is people think "oh it's new and shiny AND has a rental guarantee it must be good' add on top of that their inexperience of dealing with Salespeople (seeing through the BS spiel) and it's a recipe for convincing oneself that it's a great investment when in reality it's not really.

    IMO you've done the right thing by coming to this forum BEFORE buying, for some it's too late.
     
  5. Max_D

    Max_D Member

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    23rd Jan, 2021
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    Brisbane
    Apologies for the 3-month bump to this thread, but this is of particular relevance to us right now.

    I have my own thread going over in the strategy forum - 1st IP advice, 115K savings, Bris inner Nth - PropertyChat

    I get the feeling that we have sought some very useful financial advice from FAA, but the three example properties we've been shown as part of our portfolio are all New H&L packages.

    Their website even highlights the same with their property strategy (see step 2):

    Property - FAA

    Like @Pearser, we are (were?) close to pulling the trigger on 1-2 of these as our first IP. However further reading in these forums would suggest that we seriously reconsider.

    One was a new estate at Narangba, and the other a duplex at Bridgeman Downs (both in the Moreton Bay region north of Brisbane). Both yet to be constructed (est. completion late 2021).

    Is there no transparency in the professional advise that would suggest that a bank could value the new property between $20k- $40k less than what we would have paid?

    Would FAA still be in business after 30 years if they were leading green investors up the garden path?

    I came across a local buyers agent, Streamline Property, and one of their podcasts highlighted the many services to consider prior to purchase -

    EP 42 - Who to Recruit Before you Buy (brisbanepropertypodcast.com.au)

    They also come highly recommended on this forum.

    The key difference I can tell, is that FAA do everything under one roof, whereby a buyers agent only has a limited (albeit very valuable!) service portfolio they can offer.

    Especially when you consider FAA handle the BA, mortgage broker, accountancy, property mngt, conveyancing, annual reviews etc

    Is this luxury not of comfort to green investors? Or is it really up to the individual to form a team of experts around them prior to commencing battle on the SEQ property market?
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    If you've got a busload of equity in your PPOR to cover the shortfall on the valuation of the new property being purchased well it's obvious what happens, just use more equity from the PPOR to cover that shortfall.

    I have no experience with FAA nor do I have any idea who they are so I'm not going to speculate on that company specifically. Some companies are certainly better than others.
    Suggest asking some of the following questions;
    - Why only new house and land/townhouses recommended?
    - Do I get a copy of the bank valuation for the property I'm buying? (this is a big one)

    I wouldn't say it's a 'luxury' and comfort is probably not the right word more so convenience, usually aimed precisely at 'green' investors who don't know any better.

    Think about a 'One Stop Shop', selling you the strategy, the product (H&L Package), arranging the finance & legals - do you not see why this could be an issue??
    It may be convenient but that convenience could come at a high cost.

    Again, I would like to stress I have not had dealings with FAA and my response is not regarding that company specifically, I'm speaking from experiences with other companies that offered similar arrangements and advice.

    Will you be better off than not investing at all? = probably
    Could you do better with a slightly different strategy? = probably
     
    Last edited: 22nd Mar, 2021
    craigc and Max_D like this.
  7. Matthew Hartney

    Matthew Hartney New Member

    Joined:
    22nd Dec, 2019
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    Location:
    Sydney
    I’ve had some good results with buying land and building.

    2012- Oran park Nsw built for $350k, sold for $590 3 years later

    2016- Logan Qld built for $295k, currently worth around $400k(hoping Brisbane will have some good growth in the coming years). Rented out at $370 per week.

    2018- Camden Nsw built for $680k, currently worth $850-880k. This is my place of residence.

    2020- St Leonard’s Vic built for $445k, currently worth $600-$640k. Should be completed in May, rent will be $400-$430 per week.
     
    Last edited by a moderator: 13th Apr, 2021
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    Well done!
    Can I ask if any of these were in large master plan type estates or block you found in established suburbs?
     
    Last edited by a moderator: 13th Apr, 2021
  9. Matthew Hartney

    Matthew Hartney New Member

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    22nd Dec, 2019
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    Sydney
    All new estates/master plans. Buy the land directly from the developer, never buy house and land as the builders put a margin on the price. Try get in early at a master plan as each release the prices will rise.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Where is the independence? Who is looking after your interests?

    If you deal with a separate BA, Broker, accountant & solictor, each of these parties has been engaged by you and work to your brief. So your brief may be SE Qld not just Logan XYZ Estate.

    If they are all in-house you have someone else who is sending them the buyer with their own agendas ie sell 'my product', make finance meet 'selling price's on 'the seller's terms'in the location that the seller is pushing their product.
     
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  11. Firefly99

    Firefly99 Well-Known Member

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    I think a key aspect to this debate that’s been touched on but not emphasised is the location. Buying land and building a new house in an established suburb, particularly one near a CBD, is totally different to a home and land package in a new estate on the outskirts of a city. The former is far more likely (IMO) to be a winner.
     
  12. Firefly99

    Firefly99 Well-Known Member

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    I assume with that success you’ve done your research very well and also know what to include in a build to get bang for buck. Nice work :)
     
    Last edited by a moderator: 13th Apr, 2021
  13. JRN

    JRN New Member

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    7th Jan, 2021
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    Location:
    Melbourne
    Hi PC experts,

    I read through a few suggestions regarding the new v/s established IP.

    However I'm confused regarding "Tax Deductions" on established IP - is it not possible to claim any tax benefits on established IP. This particular point is one of the points that is confusing me between purchasing a new H&L IP or an established IP.

    Apologies if this question has been asked before - I'm not an expert in investments so any suggestions would be very helpful.

    Many thanks,
    JRN
     
  14. beesy7

    beesy7 Well-Known Member

    Joined:
    15th Jul, 2021
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    Location:
    Melbourne
    myth busted!
    Young buyers want modern but there is a shortage

    Armstrong creek (near Geelong)
    House and land on small blocks selling fast for more than 200-300k they were a few years ago
    The exodus is real, if I had a house inner ring Melbourne I’d be selling!

    Mango Hill Queensland
    Two examples here
    440k 2015 / 675k today
    https://www.domain.com.au/property-profile/57-parkhaven-street-mango-hill-qld-450

    This one 468k 2014 / 680 today
    https://m.realestate.com.au/sold/property-house-qld-mango+hill-136704402?cid=pdp:recent-sales

     
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  15. beesy7

    beesy7 Well-Known Member

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    Melbourne
    I meant This one 468k
    https://m.realestate.com.au/sold/property-house-qld-mango+hill-136704402?cid=pdp:recent-sales


    Historically I’d say older & more land content , but new (less than 10 year olds) seems to be performing very well due to strong demand from fhb & investor activity
     
  16. Aleet

    Aleet Member

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    10th Aug, 2021
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    Location:
    Victoria
    amazing!
    How large are these properties and brm/bath
     
  17. sash

    sash Well-Known Member

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    Location:
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    Yep 100% correct...lots of people on the advice of a broker headed to Newcomb as he steered people from AC in Geelong. The profits in AC has exceeded by 200k if you got in at 370k. Today you would be sitting on 250 to 300k profit.
     
  18. beesy7

    beesy7 Well-Known Member

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    Location:
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    Not Sure if your talking Armstrong creek or Mango Hill

    In Mango Hill most seem to be about 140-165m2 plus the garage 35m2. (Some include the garage in the Data some don’t, do not rely on agents floorplan or property value data. I would get an original floor plan or compare to others around if a spec build)

    In Brisbane 200m2 , 2 living, 4bed, & 2 Car is a reasonably sized house , there’s so many small houses up there especially around Logan and Kallangur (100-160 m2 with garage )

    In Armstrong creek I think you’ll find allot are on average fractionally bigger , 190-230m2 with garage.

    In Geelong the older houses are often bigger as well as the new builds. Maybe higher incomes ?

    Some areas in Geelong at the moment are seeing 150k over asking (I’m talking 20-30 year original homes in average areas - eg. not a Geelong west)
    These are often more expensive than a new build on 450m2 & only 5 minutes down the road, that is insane

    With the cost of building soaring I think looking at the value of the build size not just the land component has never been so important.
    Get a balance of the two in a nice street and I think you’ll do well.
     
    Last edited: 17th Sep, 2021
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  19. Aleet

    Aleet Member

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    Location:
    Victoria
    Sure! good food for thought, it’s always about the best way to enter the market. My current decision to make