When you have made the decision that it’s going to be property you invest in, then it’s easy to get overexcited. You’ve made the hard call, now all you need to do is find the perfect investment property and then sit back and enjoy it.
Except… the whole “finding an investment property” part is actually pretty difficult. You’ll realise that the moment you begin searching. It’s like looking for a new home to live in, but somehow even more complicated. You’re suddenly evaluating on a whole new set of criteria. You’re not concerned about the things you’d look for when buying a home – such as public transport links or whether your furniture will fit into the living room – but instead, you’re trying to make a judgement for the future.
It’s a complex time. This is made all the more difficult by the immediate dilemma that is known to anyone who has ever invested in property – do you buy new, or buy a dilapidated existing house and fix it up?
The Pros and Cons
It’s at this point, you’re likely to start thinking about the pros and cons. So let’s cover a few of them, beginning with an investment in new apartments that have never been lived in before:
- You don’t have to worry about the building being up to code or the subject of previous occupant DIY errors. It’s a fresh start.
- There’s minimal work involved; you buy it, and then you’re done.
- It’s going to be far more expensive for a new build property
- If you do decide to sell, you’re unlikely to be able to make as big a profit as you would with a fixer upper.
Now, what about the pros and cons for an existing house that’s in dire need of some TLC?
- You stand to make a much greater profit, as you will buy it at a lower price than a new build.
- You can transform the house through renovations if you wish. There is little point in renovating a new build, after all. If you like the idea of making something beautiful out of nothing, then this is the better option for you.
- While the purchase price might be lower, you’re going to have to spend a lot of money getting the property back into a liveable condition.
- If you’re going to be relying on rental income from the property, it might be some time – due to the renovations – before you can collect this.
So Which Do You Choose?
As with most things in life, the decision ultimately comes down to money.
If you have access to funds in one go, then opting for a new build is the best decision.
If you need to stagger your investment, then an existing property is the preference. This gives you time to raise more funds, allowing you to fund the renovation in stages rather than in one lump sum as would be required for a new build.
Both are valid options; the rest of the decision comes down to your budget. So, why is it going to be?