22 January 2015
by Adrienne

Steps to Building Your Own Investment Property

BuildingYourInvestment

Contrary to popular belief, you don't have to be a business mogul to set up your very own investment property. And at Homebuyers Centre we are seeing more and more people who come to us to build a modern, top quality and affordable home as an investment property. So if investing in property has crossed your mind, here are a few ideas to think about when building your own.

Advantages of Building Your Investment Property

One of the big benefits to building your investment property is that because your home is brand new, you’re unlikely to have significant maintenance costs for a while. With Homebuyers Centre, you’ll get a 25 year structural guarantee and a six month maintenance period for all new homes. When you’re buying an established investment home, a building report will help you identify any issues prior to purchase but once you own the home any structural, maintenance or pest control issues will be your responsibility paid out of your pocket.

Another plus side to building is that you get to tailor the design accordingly in line with what you think prospective tenants will want. As a building company, we can help you make these decisions to ensure your property will be appealing – whether you have specific tenants in mind based on the location you’re building or your desired tenants – or simply for mass appeal.

We think a brand new home is also likely to attract a higher quality tenant, who may be more likely to pay more for a lovely new home and treat your property with respect and care.

Our finance partners at Resolve also have access to investment loans that require a low 5% deposit, which frees up that cash to spend elsewhere.

Disadvantages of Building Your Investment Property

The biggest downside to building an investment property is that you won’t be able to rent it out while it’s being built, but you will start paying interest on your home loan throughout this time. The repayments during your home build will be interest-only (as opposed to principal and interest) so they will be lower, and on the plus side Homebuyers Centre will ensure a fast build once your home loan settles (that means when it legally becomes yours) – of around six months. That’s pretty quick compared to other builders out there.

First Home Owner’s Grant & Stamp Duty

Unfortunately the First Home Owner’s Grant (FHOG) is not available to be used for the purchase of investment properties. If you have no plans of moving into your home and to use it purely as investment, then you will still be eligible to take advantage of the FHOG when you do decide to build or buy your first property – as long as you meet the FHOG criteria. You will also need to pay stamp duty for any investment property purchase.

Resolve Are Construction Finance Specialists

Building loans are quite different from regular home loans. Unless you’re aware of all the differences, and confident in their application, you should really get advice from someone who is. That’s where Resolve Finance comes in. With building loans, the most obvious distinctions are the payment for the land and the progress payments to the builder. Clearly they’re not considerations with a regular home loan. But they’re just the start of the differences. Resolve can help choose the right construction loan for you, set everything up for you, help you with all the paperwork and do all the running around for you. As an experienced mortgage broker they have access to hundreds of loans across more than 25 lenders including the major banks, mortgage managers and credit unions and societies so it makes sense to chat to them about your investment loan. When you do talk to Resolve about your investment loan, they will also advise you to seek input from your tax accountant or financial advisor, as with any investment property there will be implications to your financial situation, including your tax.

 

All finance services provided by Resolve Finance Australian Credit License 385487. Please be aware this advice is general in nature and personal circumstances have not been taken into consideration. So please see your tax accountant or licensed financial advisor to see if this advice is right for you.