So why buy an investment property brand new or off-the-plan? There are a number of reasons that investors buy investment properties brand new or off-the-plan rather than a pre-built that is a resale. The main motivation usually stems from the very reason that people purchase investment properties to begin with, which is commonly to lower your taxable income while maximising on your returns.
Buying investment properties brand new is a sound real estate investment strategy as you’re essentially maximising on your depreciation benefits while minimising on your out-of-pocket expenses, given that buying investment properties brand new means generally lower maintenance costs.
Buying an investment property brand new: Example Depreciation Schedule
As you can see from the example depreciation schedule above, buying an investment property brand new offers a far greater return on your investment. By buying an investment property brand new you are able to claim greater depreciation benefits in the first years of property ownership. In the example above, there is a $7,716 difference between the depreciation on the first year of ownership compared to the 10th year of ownership. This is an example only and each property will differ but this example highlights the depreciation benefits of buying an investment property brand new.
This of course should not be the sole reason for your selection when buying an investment property brand new. Location, design and build quality and tenantability should all be factored into your purchase. Buying an investment property brand new that doesn’t satisfy this criteria will negate the reason for the purchase in the first place.
Buying an investment property brand new often provides you with more choice too when it comes to the initial purchase. If you purchase off-the-plan you can select exactly what you are looking for in a particular development, whether it be a one bedroom ground floor apartment or a three bedroom North facing apartment.
As you can see there are a number of reasons to buy an investment property brand new, but at the end of the day it should come down to your return on investment and really what works for you.