Building For Investment

Published On: July 28, 20230 Comments on Building For InvestmentTags: Last Updated: January 27, 20245.3 min read

Have you always dreamed of having a property that will generate a good return, either through rental income, or through capital appreciation from future resale, or perhaps through the combination of both of those things? Yeah, haven’t we all? Lots of people, however, haven’t stopped at dreaming. Instead, they’ve worked towards achieving those dreams and now they are happy with the returns they’re getting from their properties.

calculating investment

Why not do the same thing? To be more precise, why not build yourself an investment property? As you can see at https://www.mabelbuilt.com/, there are companies in Australia ready to build you the properties you want to have, so there’s absolutely no doubt you’d be able to do this if you decided to. Wondering why build when you can buy, though? A good question. Buying seems like the more logical option when it comes to investment properties, but there are actually quite a lot of benefits to building as well. While buying is the more common option people go for, we can’t deny the fact that building comes with a lot of pros. Pros you need to learn about so as to be able to make your decision on what to do.

Pros & Cons Of Building An Investment Property

Where there are pros, there are also cons, right? Right! Nobody is claiming that the building solution is perfect, but neither is the buying one. Put simply, there are no perfect solutions, as both of those come with pros and cons as well, but the truth is that one of them could be the perfect solution for you at one point or another. And, learning about both the advantages and the disadvantages of the building option will help you determine if it’s right for you at this point. Have you been thinking of buying already, and have you been doing some property hunting? If yes, you may have become quite discouraged to realize that far too many properties aren’t meeting market demands right now. While you could easily buy those, the problem will occur when you realize you can’t sell them, or rent them out and earn that profit you’ve been after. People’s needs taste changes, and builders need to adapt to those changes. Well, when you decide to build instead of buy, you’ll get to work with the builders to identify which types of properties are in demand on the market today, and then built that type, being completely confident that you’ll be able to both rent it out and sell it, whatever you choose.

Taxes should also be considered when deciding whether to buy or build, a decision that’s not easily made and that you could definitely use some help with. Help you’ll find on this page as well. While there are tax deductions you could claim for any investment property, newly built ones allow you to claim the actual depreciation on those internal fittings and fixtures, leading to reducing your taxable income. Imagine if window blinds could lower your taxable income. Well, they sure can with this option! Believe it or not, building could actually turn out to be quite cheaper than buying a new property. Not a guarantee, though, but the point is that it could happen. If you get a great land and score a good building deal, the overall price could wind up being lower than the price of buying a property. Of course, this depends on a number of factors, but the bottom line is that it is a possibility, so if you play your cards right, this could even turn out to be a cheaper solution.

stacking little wooden houses on coins

When you do a good job purchasing the land and building the perfect property, you could start building equity on it instantly. Just visit your lender once again and have it re-valued. If the price after the re-valuation is higher than the price it was valued at during the initial application process, you’re on great track. Put differently, this way you will instantly get some equity on the property. Talking of the pros might have made you think that there are actually no cons of doing this, which is not the case. As explained, every decision you make regarding your investment property, whether to buy or to build, comes with both advantages and disadvantages. Perhaps the biggest disadvantage of building is the fact that locations are limited, especially in the highly established areas. So, you may not have a lot of options to choose from, which could result in you basically taking what you can get.

Furthermore, as something is constantly being built in those established areas, there is always a chance that a huge apartment block could be built right in front of your property, blocking the view and therefore harming its value. Other things could happen and lower the price of the property, such as an undesirable business opening up in the area, or plenty of new houses being built, thus increasing the supply. Some things you cannot predict, and while none of this may happen, the possibility remains, which is why it is worth considering before deciding whether to build.

Building Benefits

Learned a lot about the pros and cons of building an investment property? Then you might be ready to make your decision and either go for this option or ignore it. As you’ve seen, there are lots of benefits to building, as opposed to buying, so this is definitely a solution worth considering, especially if you have found a great piece of land, as well as great builders to work with on designing the perfect property and bringing the idea to life.

Building exactly those properties that are in demand will lead to renting out or selling them more easily, and then there are also some tax advantages to consider. Plus, you can start building equity right away, and there is a great chance that this could turn out to be the more cost-effective solution. So, if you have a budget ready, perhaps you should start hunting for land and for the right builders, aiming at having the perfect investment property built.



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