Doing your due diligence on your builder

By Simon Birkhead

simon birkhead tnWhen entering into a leaseback arrangement with a builder, it is important to know the finer details so that you are in fact walking away with a flourishing investment.

Blogger: Simon Birkhead, Webb & Brown-Neaves

Savvy WA investors are securing lucrative investment opportunities in highly sought after locations across Perth, recognising the benefits of a display home leaseback arrangement.

Perth residents are among a growing trend of property investors leasing back to the builder at approximately 1 per cent less than the current interest rate, which in itself is a good investment. When entering into a leaseback arrangement with a builder, it is important to know the finer details so that you are in fact walking away with a flourishing investment.

1. The first important step when entering a leaseback arrangement with a builder is to do your research to find a reputable one. Awards for home design, construction excellence and customer service are an indication that the company is well respected and successful, while a good track record and history in the industry help paint a picture of trust and support. Choosing a builder who is committed to providing the best quality homes in solid locations, can really add value to your investment.

2. When purchasing an investment property, there are a few questions prospective investors should be asking the builder. Firstly it is important to understand the conditions of the leaseback, the length, return and frequency of rental payments. Does the builder offer a 7 per cent return on the purchase price of its homes, as part of a minimum 18-month leaseback arrangement? A 7 per cent leaseback arrangement offers a far higher return than money in the bank.

Another important question to ask your builder is who will be responsible for rates, taxes, insurance and maintenance. Find out as part of a fixed-term lease with your builder, whether investors can benefit from guaranteed returns, no maintenance costs, plus access to reduced insurance rates. Are utilities such as water and electricity covered by the builder?

When entering into a leaseback arrangement with a builder, you want to ensure that you have a hassle free arrangement. Find out whether the builder will maintain the property and return it at the end of the lease in a great condition.

3. It’s all about location when purchasing an investment leaseback property, so ensure that you have done your research on the most sought after suburbs or locations. With property, especially high-demand areas, you have the potential benefit of an appreciating asset.

For more information visit http://wbhomes.com.au/

About Simon Birkhead
simon birkhead

Building homes and helping people fulfil their dreams is where Simon Birkhead’s passion lies in the building industry.

Since joining the Alcock Brown-Neaves Group (ABN Group) over 17 years ago, he has grown a wealth of experience through a variety of roles. His journey began as a Scheduler, before he progressed to Site Supervisor and then Construction Manager and Registered Builder.

Today, Simon is honoured to be the General Manager of the reputable and iconic Western Australian brand Webb & Brown-Neaves; a role which is supported by his active involvement chairing the Master Builders Association (MBA) Housing Council and position on the MBA Board of Management. All of these invaluable experiences continue to give him a great appreciation for the quality craftsmanship of Webb & Brown-Neaves.

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