As a New Zealand mortgage broker I hear all sorts of stories and hear about some older houses that have cost people a lot to maintain. For this reason building a new house is definitely something that you should consider and especially in places like Auckland where houses are going to cost more, but where house prices are rising too.
Of course there will be a lot of people with their own opinions, but in today's finance environment we think that new build houses may make better rental investments.
We explain why we say this and then you can make your own decision.
Your Tenant Prefers A New Home
In most cases, new build houses are built better and to higher standards of quality than homes built a few years ago.They have better features such as ensuite bathrooms and heat pumps. Properties built today benefit from being more environmentally friendly. They have energy efficient windows, better insulation, and efficient heating systems which mean lower running costs for the people living there.
Most new build houses today will be built on smaller sections, but for a rental property that is typically quite good as it means less area to look after.
Having a house that is appeals to tenants means you should be able to find a tenant more easily, you will typically get a higher rent and the tenants should stay in the house for longer.
Lower Repair and Maintenance Costs
New build houses benefit from lower maintenance bills too and they should come with a builder guarantee. You shouldn't have an oven or hot water cylinder that suddenly packs up, and things like roofs will have many years before you need to replace them.You will generally find that tenants will look after a new property better than an older one too.
New Build Houses Are Easier To Buy
With the recent changes to the LVR rules, a property investors now need a 40% deposit when buying an existing house in New Zealand with bank finance; however new build homes are exempt from those rules and therefore you do not need the same size deposit.Some banks will allow you to buy a new house with a 20% deposit and some will even go as low as a 10% deposit.
As an investor you may be limited by the cash available to invest, and therefore being able to invest in more property for the same actual cash investment makes sense. If you had $200,000 to start a property investment plan, then applying a 40% deposit means you can buy a house worth $500,000 whereas if the deposit required was 20% then you are able to buy property worth $1,000,000.
This often means you can buy two properties rather than one, and this gives you the ability to spread your risk, gain from larger capital gains and gives you the ability to sell a property should you ever need to. We are new build finance specialists and can help you get your new investment property.
