What to watch out for and find a good investment
We all love a good bargain, don’t we?
And what better bargain is there than to invest in an old house at a great price and rent it out.
So why isn’t everyone doing it?
Today you’ll find out what catches people out when it comes to investing in old homes. By old homes, we mean established homes that may have been built more than 15-20 years ago.
You’ll also find out what could make an old house a good investment.
Let’s dive in.
What to watch out for when investing in old houses
Low rental rates
Old houses generally attract lower rental rates. It’s hard to compete against modern properties which include new appliances, central heating and cooling, and energy efficient ratings.
On top of that, new homes may be easily customised to your needs. And built within areas with new facilities.
All this increases the rental for new homes. And reduces it for old homes.
You can expect to do maintenance on old houses. It might be obvious immediately. Or down the track. Either way, you’ve got to expect to fork out for maintenance and include it in your budget.
This is not an issue for brand spanking new homes.
Fewer financial incentives
The government hands out grants if you’re buying a home for the first time. If you’re buying the house to invest, a common strategy is to live in it then rent it out later.
But the catch to this grant is they’ll give it to you only if you’re buying a new home – or a home that’s been significantly renovated. Check out the conditions for each state on the First Home Owner Grant website.
So you could get a bargain on an established, old property. But if you get such a great price on it, your property probably isn’t going to qualify for the grant.
On top of that, you won’t get a depreciation allowance for an old property – only for a new one.
All this isn’t looking good for established properties, is it? Let’s see whether there are any advantages to scouting for one at all.
How to make an old house a good property investment
To combat low rentals
Carefully choose your location. And do the right renovations so your house looks clean. Liveable. And looks great from the outside (curb appeal).
This will prop up the value of your house which will help you get a higher rental.
Old houses can suck a budget dry pretty quickly. Focus on the big things: make sure your house is structurally sound before settling.
Take the time to get a professional building survey done. The cost is small compared to the reassurance you get—and the money you’ll save.
You’ll know exactly what the issues are, so you have an idea of how much it’ll cost to fix if you buy the property.
Get smart about financial incentives
The government gives out the first home buyers grant to give families a leg up—but also to help out the construction industry.
That’s why they want people to buy new houses. Or houses with plenty of work done to them.
These create work and jobs in the construction industry. So you might be able to get an old house with enough work done to it to get a first home owners grant.
When it comes to depreciation allowances, you won’t get them. But if you get an awesome deal for the property – and it’s in an area set for capital growth – you could save more than the tax breaks you’d get from a new property.
Old properties give you an opportunity for a good deal
Every month I speak to sellers who are keen to sell a gold nugget of a property. They’re not easy to find, but they’re around if you know how to find them.
Old properties always have issues you can use to bargain down to a lower price.
It doesn’t mean you get any old house. You buy one that’s structurally solid—so you make money as soon as you buy. And you don’t need to wait 8, 15, or 20 years for its value to increase.
If you decide to renovate, subdivide, or extend, you’ll boost the value of your property.
What that means is you’ll multiply your returns and fast track your financial plans—and your lifestyle plans.
Want to get a bargain with an older property?
At Buyers Agency Australia, we know property investing can be daunting—especially if you’re not working in the industry, day in and day out. It can be costly and scary to know what to do, and who has your back.
That’s why here at Buyers Agency Australia, we have you covered.
Contact us for your free, no-obligation, 30 minute consultation.