The question of what is better – old investment property or new investment property is one that gets asked many times. The answer is pretty simple new. There are many reasons for this which I will list below.
Because new investment properties will have a higher amount of depreciation able to be claimed, that will make a huge difference to your cash flow. Example – if you are on 35% tax rate and you are able to claim $10 000 worth of depreciation per year (this would only be applicable to a new investment property) then you are going to get $3 500 back from the government for absolutely no cost at all. That is almost $300 per month in your pocket for no cost. If you are on 46% tax rate – that will be $4 600 cash in your pocket or almost $400 per month.
New investment property tends to be easier to rent then old places and there is nothing worse than an investment property that is sitting unrented. New investment property also tends to attract a better quality of tenant. This means fewer hassles for you the owner.
New houses come with builder’s warranties so you don’t get the maintenance issues that you have with older properties. Older investment properties tend to consistently have maintenance issues as do older houses that have been renovated. This is an important factor if you are building an investment property portfolio and diversifying into different locations which I think is an extremely wise thing to do.
Stamp Duty saving and government benefits
If you build a new investment property the stamp duty savings will be huge. You will save around $10 000 in most states over buying an older property. Also, there have been a lot of state and federal government incentives if you build a house rather than buy an old investment property. Up to $30 000 in some states.