Botania in Fraser Rise is a fantastic location for property investment because of its prime location and wealth of amenities on its doorstep.
Close to schools, shopping, and transport corridors, Botania is connected to everything a family wants and needs.
The biggest question to ask yourself when buying your first investment property is whether to build and sell or build and rent the property out. Check out our news post below where we compare the pros and cons of both options.
The Benefits of Build & Sell
Make your money back more quickly
If you are a seasoned investor, or want an opportunity to build wealth more quickly, than this is the option for you!
This allows you to take your newly earned capital and reinvest in another place sooner or utilise any profits you make for a holiday, life event, car or paying off your own home loan.
No long-term maintenance
The Build & Sell option allows you to reap what you have sowed sooner. You also do not need to go through the effort of finding a real estate agent to list the property with or allow for any funds for ongoing maintenance, as these become the responsibility of the new owner.
The Cons of Build & Sell
Higher initial outlay
If you plan to build and sell the house once construction on your investment property is complete, than you also need to allow some funds to do this with which can be hard to come by after settling and all construction costs are added up. We recommend factoring these costs in when you are initially looking for your block of land and deciding which home to build.
Building and selling is a great option to consider if the market is up and your guaranteed to get a great deal for the cash injection you have made into the investment property. However, when selling a property for profit, the timing this property is listed in the market can make all of the difference. Nobody wants to list a property that hangs around unsold for months on end that will continue to rack up costly agent fees.
If the market is slower moving, hanging on to the property and renting it out could be the way to go.
Capital Gains Tax
Capital Gains Tax (CGT) is the tax you pay on profits from selling assets, such as property.
By buying land and building a home you are adding value so it is likely you will have a capital gain when you sell the property. If you do have a capital gain, it will increase the tax you need to pay. You may want to work out how much tax you will owe and set aside funds to cover it.
The Benefits of Build & Rent
Make more money over time
If you want an investment property that you can sit and hold on to, allowing you to grow your wealth over time, then this is the option for you.
Properties that are rented out are not affected by the swings and dips of the property market. This means you do not need to worry about selling your property at the “right time”, in a great area, your property will always make a great rental return.
What is rentvesting?
Rentvesting is when people live where they want to live and purchase where they can afford. The rental income they earn helps them to pay down their mortgage on the investment property, allowing them to become a homeowner without having to change their lifestyle.
Tax Benefits of Investment Property
Everybody loves receiving a great tax return and this is one way to go about bumping it up.
Owning a rental property allows you to claim a higher depreciation on the home compared to owner-occupier homes.
All home maintenance work, repairs, and renovations you also undertake on the property will also be a tax deduction.
The Cons of Renting
All homes require a level of annual upkeep and that goes without saying for rental properties as well. Rental home maintenance and repairs are legislated in Australia meaning, there are works that are mandatory to be carried out on a regular basis. These include such works as fire alarm checks and gutter cleaning. These do benefit you, as the homeowner, to protect your home but it can feel odd paying for something that doesn’t serve you directly.
Being a landlord
This alone is enough to turn some people off from buying an investment property to rent. It can be a daunting concept letting unknown people live in a home that you have worked hard for. Thorough insurance cover is a must here to ensure that you’re fully protected in the unlikely event it is ever required. All insurances are of course also a tax deduction.
If it is an admin or time barrier for you, Real Estate agents act as a great middle person to do a lot of the leg work of listing the property and liaising with tenants for you and once that trust is built, can even inspect the property once tenanted for you on your behalf.
We hope you have found the above information useful of things to consider when buying an investment process.
If you are interested in purchasing an investment property and would like to chat to a member of our friendly sales team, please feel free to reach out on either of the following methods: