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New Build Property For Investment – What You Need to Know

Before buying a new build property for investment, consider how much it will cost and what to look for when comparing properties. Here we cover the deposit and the factors you need to consider when choosing a new build. You should also consider the location and potential rental yield before deciding on a new build property for investment. These tips will help you find a property that is both affordable and profitable.

Cost of buying a new build property

Buying a new build property for investment comes with many advantages, including tax depreciation. Unlike purchasing an existing property, you have more control over the price. New build properties are usually affordable, but you need to know several things before investing in one. First, you need to be aware of the timeline. Some new builds may be ready to move into, whilst others may take up to four to six months to complete.

Buying a new construction property is also a good choice if you already know where you want to live and what you’re looking for. New developments may have several options for buyers, including flexible move-in dates and low deposit requirements. You also get to customise your home to your specifications. Whether it’s the colour scheme, light fittings or carpet, you can have a completely customised space. Or The builder can make all those decisions based on his extensive experience of what works in the market for the best returns.

Deposit required

If you are planning on investing in a new build property as an investment property, you should understand the process that will lead you to complete your dream property. A deposit of 20 per cent of the total purchase price is generally required to secure a new property. However, this amount may vary depending on the builder. Some builders may need a smaller deposit or a higher deposit. A higher deposit may be worth it if you plan to rent your investment property out immediately. Depending on the builder and the investment property type, you can negotiate a more flexible payment plan or a single-part contract..

A 10 per cent deposit is standard for investors purchasing an existing property and 10 to 20 per cent for those buying new homes for investment purposes. However, new builds are generally eligible for lower deposit amounts because of loan-to-value ratios. This may help you spread your deposit over two or more properties rather than one larger one.

Location

Before buying a new property for investment, you should consider its location first. If the area is considered desirable, the property will likely sell quickly. However, the sale process may take longer if the area is over-saturated with units. To avoid this, conduct some research on the local market. Find out what prices were achieved for similar properties in the area, the average selling time, and the estimated returns from the property.

There are two types of locations for new builds. The first is a popular area near the CBD. These new properties are available in limited supply and generally have a lower rental yield. New builds often are located in more suburban areas, requiring a longer commute for those working in the CBD but a shorter commute for those working in the suburbs. On the other hand, existing properties are more likely to be located in mature suburbs, where the area has matured over time and has plenty of amenities. The second type of property has the potential to increase in value over time.

Interest rates

When you compare interest rates on existing and new build property for investment, you’ll see that the latter is better for investors. The difference is in the amount of down payment required. While it is common to need 20%, experts recommend a 25% down payment. New build properties can have better interest rates or repayment plans. In addition, they are better protected against interest rate rises as new builds come off the building site. Listed below are the differences between the two types of mortgages.

Rising interest rates will affect their plans differently for those who plan to sell the investment property. While they won’t affect the price of the investment property in the short term, they’ll affect the asset’s long-term value. Rising interest rates will make financing projects with thin profit margins harder. Rising interest rates will also slow down the construction process. On the other hand, rising home prices will help you increase your returns in the long run.

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