I often get asked by Landlords if they should buy new properties or invest in an established property. As with everything, there are pro's and con's to both.
The advantage of a new build property is the reduced likelihood of having any maintenance issues as everything is brand new and under warranty. Also prospective tenants find a new property appealing and generally are happy to pay a slight premium for that so an investor can expect a higher rent.
The downside is that they generally cost more than older stock of housing which will reduce your yield. There are ways you can minimise this that the property developers might not like to share with you.
To get a good deal you should remember a couple of things. They have to sell their properties but you don't have to buy theirs. They will have targets to hit for sales and visiting at the end of the month or quarter may be fruitful if they are a little low on sales. If you can demonstrate that you are a serious buyer and ready to do a deal they can be persuaded to give you a decent discount. If you have the funds to buy 2 or 3 in one go then you are in an even stronger position.
One option i like is to reserve the show home. You have to get in their pretty quick but the developer will then rent the property from you while they build the rest of the development and then hand it over at the end in pristine condition with the gardens landscaped and normally a few extras in the kitchen too.
With older properties you have a greater choice and variety of property and the vendors may be motivated to sell at a lower price for a quick sale. As investors we have the advantage of not needing to sell a home so can move quickly in the process. Investors should use this to our advantage. We don't have to move and we don't have to buy. We can afford to be patient and wait for the right property to come up at the right price. Older properties are generally cheaper than new ones which will improve the yield.
On the downside are the uncertainties with maintenance. The boiler may blow up the day after you buy it and you just have to live with that risk. You may have to factor in some refurbishment costs aswell. The property may look nice when it has furniture in it but as soon as all the furniture has gone and the room is bare you'll see all sorts of imperfections that may need addressing before it is ready to be let.
As you can see, there are many things to consider if you are undecided between new or old.
If you would like to compare a few options or have a friendly chat about property why not pop into our office or give us a ring on 01344 209088.
