Investing in property: house and land packages VS pre-existing properties

This is a quite controversial topic with people on both sides arguing that they would not invest in anything else. There is little doubt that they are very different strategies. Each has its own advantages and disadvantages and each have shown by different people to work for them. Often it may come down to your own circumstances and objectives.

Below I have listed the pros and cons of investing in either a new house and land package or an existing home.

New properties including house and land packages

Pros:
- There can be some big cost saving when buying new (stamp duty).
- Less trouble, that is repairs and maintenance (renovations)

- No renovation costs
- Inspection costs (pest inspections or building inspections).
- Great rental yield as a percentage of the purchase price (more help with the mortgage).

- Depreciation benefits

Cons:

- little market data in new areas so it can be difficult to know the housing market price

- capital gains may be less in early years when there is still new housing stock available on the market.

- buying off the plan can mean that you don’t know exactly what you are getting until it is completed, well after you have bought and paid for the property.

Existing properties

Pros:

Run down properties can often be purchased at a reduced cost.
Renovations can add value to the property if you are a DIYer
Property market data is readily available.

Cons:
Hidden costs where repairs and maintenance may be needed.
Renovations can be time consuming, reduce the time that it can be rented out and can sometimes blow out in cost.

High capital requirements (many people just cannot afford to buy inner and middle ring properties)

Unaffordability can reduce further capital gains.

Conclusion

In the end it really comes down to your situation and objectives.

There are a range of options available for someone buying a new house and land package or if you like, an existing property.