A Property blog by Paul Bennion.
Buying a house and land package has become increasingly popular with Australian property investors during recent year. With the start of the new financial year just days away, there is expected to be a surge of activity by investors purchasing house and land packages especially in outer suburbs of capital cities.
Property investors should consider the following tips before making a decision to purchase:
- Check the demand for rental properties in the local area. If it is a new area in the outer suburbs with limited social infrastructure then it may not be an attractive location for people to rent a home and the investor could struggle achieving a reasonable rental return on their investment. A good tip is to check with the rental department of a local real estate company to determine the demand for rental properties in the local area and what type of homes are in most demand.
- If you plan to buy a house and land package in a new area, then choose a location which has a unique selling point i.e. a house and land package overlooking a scenic park.
- The size of the lot is also important when considering the future rental return of the house and land package. If the house and land package has limited garden space and the area is popular with families, then the home may be unappealing to a large number of potential renters who want outdoor playing space for their children.
- Check how many house and land packages in the local area are being sold to investors. It is better to buy a house and land package in an area where most of the residents are owner occupiers because they generally keep their properties in a better condition than renters. This can have a bearing on the street appeal of the area which can be a key issue for future buyers and impact on the resale value of the property.
- Another issue to consider is the number of new homes being planned in the specific location you plan to buy a house and land package. If there are hundreds of new homes planned in the near future, this could increase the overall supply and limited the potential for future capital growth.
- Take your time selecting a house and land package and read the fine print to protect your interests. Check the price of established homes in the local area that are near new and similar size to determine if you are getting value for money.
- When you take possession of your new house and land package, undertake a tax depreciation report for your new property as new homes offer the maximum tax depreciation benefits. Many investors do not realise that features that form part of the house and land package such as window treatments and floor coverings can be depreciated for tax purposes.