Once you have decided your wealth creation goals and you wish to include property investing as a component you need to start investigating the different types s of properties available and the pros and cons of each.

New Property
These properties are attractive to investors who like to sit back and relax and not have much involvement in their investment. They are newer, lower in maintenance and when things go wrong with the building it’s often covered by the builder’s insurance or the owner’s corporation. These properties also come with higher tax benefits in the form of depreciation which can assist with cash flow.
The purchaser price, compared to established property, is higher for new properties which is similar to paying a new car premium. The developer needs to cover costs and profit.
We usually advise buying this type of property with extreme caution as they can often take longer to realise capital growth due to the “new premium” paid. In any newer development, there are always going a few forced resales which can also effect the growth of the surrounding properties and developments.
Tenants are often attracted to the newness and mod cons in these properties and can often pay a higher rent for these luxuries. If there are dozens of similar properties being marketed for lease in the same area at the same time the premium rent may not be achieved.
With these properties, you are not usually provided with an accurate estimate of the out goings for the property prior to purchase.

Established Property
Established property is priced according to market forces, has less volatility with pricing and is far more likely to increase in value after purchase. Established property also has the advantage of being able to add value by renovating and improving the property where new does not.
With established property, you can be sure you are purchasing at true market value with no profit margin built in by the seller.
Maintaining an older property can sometimes be more expensive and can also mean vacancy periods whilst renovations are being completed. They will come with reduced Owners Corporation fees compared with new property.

Off The Plan Property
There are many seductions involved with an off the plan purchase which make it an attractive proposition. First there is the stamp duty saving. Depending on the stage of completion the greater the saving. The earlier you sign a contract the more you save. If you are an overseas buyer it allows you to get a foothold in the Aussie market under the FIRB. Lastly you can often buy with no money down or by using a bank deposit bond so you don’t need to tie your own money up.

This is the riskiest type of purchase you can make and can have some major disadvantages. On many occasions these properties have dropped in value between sale and settlement and the purchaser is required to find the shortfall to make up the difference or end up defaulting and losing their deposit altogether. Remember this property is brand new so there is no true value attached to it.
There are also scenarios where the developer can make variations to the property without your consent and you are compelled to purchase. Remember you have not physically inspected this property so you probably won’t even be aware of the changes made.
A lot of these projects don’t even get off the ground due to lack of sales. Many require 50% pre-sales before they can obtain finance to proceed with the development. If you have signed a contract and paid a deposit, your money could be sitting around in trust for 6 months before you are told the development is not proceeding which can mean lost opportunities elsewhere whilst the market is growing.

The amount of information available on the pros and cons of investing in different types of real estate is plentiful. We find when it comes to new versus established you’re either one or the other. There’s not a lot of fence sitting. We feel, in this article, we have brought to light some of the paramount points to consider when planning your strategy for wealth creation using property as one of your investment vehicles.

Always remember with investing in property and talking with sales people. If it sounds too good to be true it more than likely is.


If you would like to engage us to buy a home, an investment or to manage a property,
or learn more about our services, we’re ready to hear from you.

1300 472 289

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