When embarking on a property investment venture, there are two routes to follow: buying an existing property or a new build.
Property investment consultants will tell you that there are multiple advantages to opting for a new build which will be outlined here.
Financing Considerations
New builds are exempt from the Reserve Bank’s loan-to-value ratio (LVR), which measures how much a bank can lend against a mortgaged property in relation to the property's value. The Reserve Bank has recently updated the limits, with tighter restrictions imposed on investor loans.
If you are buying an existing property, most major banks will lend only up to 60% of the property’s value. While on a new build, they will lend up to 90% of the build price, making this option more affordable over the loan period.
Taking The Long Term View
To get serious about generating wealth from investment properties, you need to think long term and think big. Building one property is the way to start, but if you want to maximise your benefits, you need to leverage the income and equity you are making to apply for new loans and see growth in your portfolio. Property investment consultants can help you build a personal long term strategy that is right for you.
Property Investment Consultants Advise on Tax Efficiency
Ensuring that you select the proper ownership structure for your new build will go a long way to providing tax efficiency over the lifetime of the investment. There are multiple different ways to structure the ownership of your new property to minimise taxation on rental profits legally. Therefore, it is vital to discuss the various options with your property investment consultants.
Other New Build Considerations
There are some important factors to take into consideration before undertaking a new build:
- Traditionally, new builds run over the estimated costs. You would be well advised to factor in at least 10% on the quoted build cost to avoid financing problems later.
- Most new builds come with a 10-year master builder guarantee, and because it is new should require very little maintenance in the first few years.
- New builds are generally easier to rent.
- New builds will automatically comply with tenancy laws and current rental standards.
Whether you opt for a new build or decide to buy an existing property, get in touch with Simpler today to access a professional team of expert property investment consultants. We offer excellent advice and tailoring of property investment portfolios to suit your specific
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