Property investments are one of the hot and lucrative money-making long-term ventures when planned and done correctly.

It’s not surprising to see entrepreneurs have real estate assets among their investment portfolios, especially those who know how to take advantage of the opportunities that they find in the real estate market.

But while property investment is a promising proposition, it can be a bit challenging for first-time investors or those who may have limited finances as real estate assets require a lot of capitalisation from purchasing, preparing, and operating commercial properties.

With careful research, planning, and strategy-building, property investment can be a very sound and rewarding choice.

New versus existing property

One of the common yet important questions real estate investors ask is what property status do they acquire for their investment- should they choose a new property or take advantage of an existing one?

In reality, there’s no hard and fast rule when it comes to choosing between a new or an existing property, except the fact that it depends on a lot of factors that come into play. 

This is because there are no two or properties that exactly alike that are available in the market. This usually occurs for new projects such as apartment units or community developments, and very rarely for existing units or properties.

It would also depend on an investor’s financial status, cash flow, property situation, market forces, etc.

For sure, an investor’s decision will have to depend on weighing the benefits and disadvantages based on their individual and financial situation. 

Nonetheless, there will always be pros and cons that will have to be considered.

Pros and cons on new properties

Several years back, Australia has experienced a surge in new housing developments and offering attractive investment options for first-time buyers.

Pros 

One of the best advantages of new properties is the use of modern designs, aesthetics, and mostly equipped with state-of-the-art fringes and features that appeal to investors and young home buyers.

Another benefit is that the purchase process becomes less complicated as property and land are combined, as well as fewer things to take care of or arrange as it comes in an all-in package.

Many new developments come with very attractive introductory pricing which can be very attractive to first-time investors, especially when established communities or properties located in central business districts or bustling suburbs are often valued beyond the reach of small-time investors.

New properties often provide instant equity, allowing buyers to combine land, construction, and labour costs. Such properties in rising market environments appreciate faster and worth more than what it was paid for.

Investors also get to start on a clean slate and would less likely incur costs for repairs since the property is new.

A new property is also mostly eligible for higher depreciation deductions.

Cons

Occasional delays may be experienced in the building execution and development with factors such as inclement or bad weather.

The location may not be very attractive at first, since most new developments are established in not-so-common or popular areas.

Additional costs may be incurred for custom construction such as features or amenities such as adding a driveway, fencing, and landscaping.

There’s also the risk of varying bank valuations, especially on developments located in less-established areas.

Pros and cons of existing properties

There’s a lot of difference between new and used properties, which the latter has been lived on or operating as a commercial or rental property before it was listed for sale.

Aesthetics-wise, existing properties may carry over the one it was originally built with but does provide a sense of history or sentimental value such as a Victorian-era building or a brick home.

Pros

Existing properties can provide buyers with great location options especially for properties located in well-established communities or urban areas.

These properties may come with pre-established fencing, driveways, gardens, and landscaping, which can often be factored in with savings since you do not have to develop these as it came with the property purchase.

Investors may also be less likely to incur costs for inspections and may be able to determine the actual status of the property.

Cons

As the property is not new, it may need some repairs or renovation.

Additional spending may be incurred to upgrade the kitchen, living areas, bathroom, and other areas to make it appeal more to tenants.

With the property designed and made based on the preferences of its previous owners, it may need some changes that would suit your tastes or that of your target market.

You make the final choice

The bottom line is that you as the investor make the final decision based on your assessment, financial situation, and due diligence. 

Your investment preferences may vary based on your target market either those that prefer new developments or those who want to bask in a traditional old-world charm of an existing property.

Both options have their benefits and downsides, so investors should determine their property investment goals and make their choices best on what would suit their portfolios best.