WHY BRAND NEW PROPERTIES
Most people live busy lives and a brand new investment property makes an excellent choice.
HERE IS WHY
Low maintenance costs by way of time and money
New-builds are exempt from a 10 Year Bright Line Test. The Bright Line Rule only applies for 5 years. Therefore, if you hold the property for just over 5 years, there would be no tax to pay on the realised gains.
New-builds are exempt from the removal of mortgage interest deductibility. This means that you can claim 100% of interest costs for 20 years.
Your tax position and therefore cashflow can be further optimised by claiming depreciation on chattels. The depreciation on chattels is at it highest in the first 5 years of the property’s lifetime. Another major benefit that you wouldn’t be able to gain from an older property.
New and modern means more desirable for tenants
Built to comply with the Healthy Homes Act
Higher rental income for new builds.
Here is another massive benefit: Loan to Value ratios on new builds only requires 20% deposit versus 40% for older properties. For instance, if you have $200,000 of investable equity in your home then your borrowing capacity is as large as $1,000,000 as opposed to only $500,000. So, you might be ready to invest much sooner and start building wealth for your future.
So, if you want an easy to manage hands-off investment that is also lucrative then a new build is a great option to consider.
Have concerns about New Builds?
The developer/builder might ask you for more money beacuse of supply shortages and thus, increase the costs SOLUTION DIAMOND PROPERTY AND WEALTH OFFERS: We only recommend properties that have a fixed price, and the contract is turn-key. Hence, if the developer runs into some challenges, it is his problem, not yours. We pre-negotiate the clauses in the Sale and Purchase agreement, so the Cost Escalation clause is never going to be part of it. We simply will not work with the developer who would insist on one. We only work with the developers/builders who have long track record, experience, and robust systems to manage their materials supply and therefore get their pricing right. Because we do work with very reputable companies, they have great relationships with their suppliers and get their materials without major delay. FUN FACT NO.1: WE HAVE NOT HAD A SINGLE CLIENT WHO HAD TO PAY MORE TO A CHEEKY DEVELOPER!
The developer invokes a sunset clause so he can cancel our contract and re-sell the property at a higher price. SOLUTION DIAMOND PROPERTY AND WEALTH OFFERS: We manage to negotiate a sunset clause only for the purchaser’s benefit. This is the case in around 70-80% of our contracts. You might ask: “Well, what about the other 20% of purchasers? Are they at risk” Well, this is where the next solution becomes massively important: As per above point, we only work with very reputable builders who have very high levels of integrity. Plus, sometimes it is the bank’s lender that insists on the sunset clause which is for both parties’ benefit. Hence, it is impossible to change it even if the developer wanted to. In this case, it is vital to do business with people/companies you can trust. When we vet the developer, we always ask if they ever had to invoke the clause. We would not work with the ones who did! The developers we work with take their reputation seriously, by the way, so do we! FUN FACT NO.2: WE NEVER HAD A SITUATION WHEREAS A DEVELOPER INVOKED THE CLAUSE AND THEN RESOLD THE PROPERTY FOR MORE.