Despite living in somewhat uncertain financial times, the property remains a generally safe longer term investment to make.
But when choosing what housing stock to invest in, should you go for older properties that may have period appeal but will require more in terms of maintenance costs or should you aim for new build developments?
There are still a few investment principles that you need to know in order to make investing in new housing stock profitable, such as ensuring your rental yield is significant enough to cover ongoing maintenance costs, as these will arise even on a newer property.
Making New Build Investments Pay
It’s easy to think that new build or off-plan properties will be a hassle-free investment, but you still need to cover all the bases in order to make sure you have the right decision in hand.
Whether you buy direct from the developer or choose to go through a property agent, you still need to understand the local area and evaluate its future growth potential. What businesses are operating in the area? What new retail or office developments are planned to go ahead?
The rental demand must balance out in order to make it a worthwhile deal. If you work closely with an agent to find Kierland Homes For Sale you may be able to agree on a great off-plan deal. The figures have to stack up because new build developments don’t automatically generate high yields.
As ever, make sure you’re taking into account running costs, maintenance, house insurance, and a management fee as part of your assessment.
The Formula For New Build Success
The good news is that canny developers will have done a lot of homework about up-and-coming locations, tenant profiles in the local demographics and growth potential.
But as an investor, you need to be asking the right questions to proactively manage your own portfolio. Look into the reputation of the development company and their pedigree of past builds to give you an indication.
Make sure that the time scales are within a reasonable distance of completion for you to be able to get a feel for market demand and house prices at the point your property will start to generate money – if it’s too far in the future, a lot can change which may make predictions too far ahead pretty redundant.
Of course, purchasing earlier on can often net you a better deal from developers keen to shift a few units to get the ball rolling, so you will have to evaluate that against the potential risk of early adoption.
Calculating Maintenance On New Build Investments
One clear advantage of buying into new build housing is that the energy efficiency of the properties is required to be of a much higher standard.
Investing in older, more established properties can also bring benefits, but you are far more likely to find yourself needing to finance major works such as a roof replacement, rewiring an old house, or paying for a new boiler which should not be a concern with a quality new build.
If it’s important to you that your properties start to generate an income quickly, then a new build, where you can have a tenant installed almost from day one, is definitely the way to go.