So you’re click into our article so you’re probably wondering, What’s a better investment? Old Properties OR New Properties? Investing in real estate offers an array of choices, notably between new and old properties. While each type has its merits, recent findings suggest new properties might offer superior financial returns. This discussion draws upon an example comparing investments in new versus older properties, emphasising the advantages new constructions can deliver to your investment portfolio.
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Financial Benefits of New Properties
New properties often provide significant financial benefits over their older counterparts. One standout advantage is the potential for higher cash returns. For instance, a case study involving a new property in a developing Brisbane suburb illustrates this point. Although appearing as a typical house, this property incorporates dual income features with two mailboxes, translating into a considerable annual cash return of $65,000.
The property, originally purchased for $730,000, has seen a yearly appreciation of $70,000. Despite the higher initial cost, the financial returns are bolstered by tax depreciation benefits. In this example, the depreciation claimable on the property amounts to about $16,000 annually, offering substantial tax relief and enhancing the overall cash flow from the investment.
Comparing Older Properties to New Properties
What’s a better investment? Old Properties OR New Properties? While older properties might offer potential for capital growth, they often fall short in terms of immediate financial returns compared to new constructions. Older properties typically attract lower rental incomes and offer reduced depreciation benefits, which can affect the overall financial attractiveness of the investment.
Investing in new properties might initially seem costlier, but the ability to claim higher depreciation and generate dual incomes often compensates for the higher price tag. This scenario allows investors to expand their portfolios more aggressively than if they were limited by the lower financial returns of older properties.
Conclusion
What’s a better investment? Old Properties OR New Properties?? The decision between investing in new or old properties hinges on several factors, including financial goals, market conditions, and personal circumstances. However, for those looking to maximise cash flow and tax benefits, new properties offer compelling advantages. With the right strategy and professional guidance, new properties can significantly enhance an investor’s ability to grow a robust and profitable property portfolio.