don't buy an investment property in warrnambool
Create instant equity by choosing to build rather than buy your investment property in Warrnambool
The secret to successful residential property investing in Warrnambool
When you hear the words- ‘Save yourself the hassle of building’, what you’re really hearing is ‘want to pay around $50,000 more for your investment property than you need to?’
What you should know is that when following the right process, building saves dollars. Now we aren’t just talking a few dollars, we are talking a whole lot of dollars.
When you buy an existing home, you’ll pay a whole bunch of government stamp duty on top of the purchase price. Currently (depending on your circumstances and your intended use of the property) on a $400,000 home you’ll pay around $20,000 in stamp duty on top of the purchase price when you buy an existing home as an investment property. When you build a home you only pay Stamp Duty on the price of the land which is minimal in comparison at around $4000 on a $150,000 block of land, again depending on your circumstances.
CALLING ALL RESIDENTIAL INVESTORS
What you may not have considered
When you build a home, you’re effectively buying a product at a wholesale price.
Building is like any other industry in the world in that it’s designed to be sold finished and completed for more than what it cost to produce it. Let’s look at an example. You buy a block for $150,000 and build a $270,000 4 bedroom, 2 bathroom, 2 living area, double garage home on it. It ticks all the boxes for a great family home. Add another $20,000 for miscellaneous costs and you’ve built a new home for $430,000. Generally speaking (and if you’ve followed some basic principles) that house might sell in today’s market for around $460,000 - $485,000. By building, you’ve just created $30,000 - $55,000 of instant equity and created in total (including your stamp duty savings) up to a whopping $75,000 in value. For $75,000 you have to wonder if the ‘hassle of building’ (as it's so commonly referred to) might be worth having.
Don't pay full Stamp Duty by buying an existing home. Learn how you can pay zero Stamp Duty on the house.
The government rewards investors who choose to build. You can claim capital works deductions and depreciation for up to 40 years which effects significant tax savings.
Rather than buy just any old house, build an investment property that is optimised for maximum capital growth and rental yield.
the tools to succeed
Know how to build for your target market.
You can choose to build an investment property that caters for any target market including First Home Owners, Singles, Couples, Retirees, Families, Upgraders or Down-sizers.
Knowing what market your targeting can help you decide what’s the best type of investment property to build. Doing some research and knowing what’s in demand is also a smart idea when defining the type of investment property you want to build.
For example, if you are building a property catering for the first home owners/couples/retirees or downsizers, you might choose to build a low maintenance 3 bedroom, 2 bathroom, double garage, 1 living area home on a small allotment. That type of property would attract the majority of people within these markets, both from a resell and rental perspective.
If you want to cater for families, you might choose a larger allotment to provide outdoor space, a 4th bedroom/study, an extra living area etc. This type of property would attract the majority of families with 2 or more children.
You may choose to build an upmarket property with all the bells and whistles, but you should be prepared to be a little more patient to find a buyer or a renter, simply because there is a smaller percentage of the market who can afford to buy/rent that type of property. They are out there for sure, there’s just not as many of them.
Building a house catering to the tastes of an ‘imaginary friend within this majority market’, rather than according to your own personal tastes requires discipline. Investors are more likely to stick within their budget than someone who is building a home to live in themselves. A good investor will be able to separate desire from need. But there is a fine line. Investors can be guilty of building a bare bones home which is ok in a high demand market where people don’t have a range of rental properties to choose from. But, should at any time the supply outweigh demand, you’ll want to make sure that you’ve got the type of property that tenants will line up for. You’ll want to have built the type of property that will fetch premium rent with equally premium tenants.
WORK WITH AN EXPERT
Help is available if you'd like some guidance.
Creating the ultimate investment property isn’t easy. It requires experience, skill, research and attention to detail. And this is where we can help.
The rule to safe property investment is quite simple. Find out what the majority of people within your market are looking for and build it!
If you'd like to discuss how we can help you build the ultimate brand new investment property in Warrnambool with the goal being to generate the highest rental rental returns possible, then please get in touch.
Personal Guided Tour
Want to hear how we've been able to build and create instant equity? Book in for a tour of some of the properties we're currently working on in and around Warrnambool. During the trip we'll share our foolproof plan for creating instant equity by building. Call us or submit your details below and we'll be in touch to arrange a time via email.