The benefits of purchasing brand new builds, according to an investor

1 minute read

The benefits of purchasing brand new builds, according to an investor

by Ezekiel MacNevin 03 April 2019 1 minute read

New builds have copped a bad wrap in recent months, but there are a host of pluses investors should consider too. 

April 03, 2019

There are numerous benefits associated with purchasing new builds that are similar in terms of structure and maintenance requirements, property investor Scott Monk said on the Smart Property Investment Show.

Touching on the reasons for purchasing five brand new properties in his early twenties, all of which were basic two-bedroom apartment developments, Mr Monk further explained that it can often be easier to find tenants for new properties.

New builds generally do not have structural problems – particularly associated with wear and tear – while older properties may require repairs and maintenance that can be expensive to fork out the money for, particularly in order to be appealing on a lease.

“Agents aren’t always the easiest people to deal with in terms of finding out, you know, whats going on, in terms of your market research. These were a lot easier for me to research. I knew what I was dealing with,” Mr Monk explained.

“I knew that Id be able to have them tenanted... [and] I knew what the rent would be. Basically, I had all these facts that lined up for me.”

According to the property investor, this made the process of acquiring and profiting from several new investments – in his early twenties nonetheless – far more manageable and beneficial.

Mr Monk said that depreciation allowances for buying new builds were “a bit more generous” back then, sitting at four percent for building depreciation.

“Then, youve got your depreciation on your other items in addition to that. I guess one of the factors was that theres more transparency for me monitoring that at the time… as opposed to existing stock, because it was easier to have your reference point,” he said.

“These properties, they werent really that unique compared to one another, whereas actually buying, you know, existing stock, well look, every single property has its own little idiosyncrasy.

“So in the case of these new properties, when they were new, well, that was part of the arrangement, that… [the property manager] would actually find tenants for them.”

After this, Mr Monk said he would pay a fee to an agent to find new tenants as the old ones vacated.

The benefits of purchasing brand new builds, according to an investor
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Ezekiel MacNevin

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