10 reasons house and land can be a good investment

It’s widely accepted that house and land is one of the best and most cost-effective ways for first homebuyers to get a foot on the property ladder. But a house and land package can also be a sound option for investors.

Some of the big draw cards for prospective investors include financial savings, such as stamp duty concessions, depreciation and tax benefits; and the fact that new estates are often located in fledgling areas, which can mean greater opportunity for capital growth if you get in early enough.

Here are some reasons why a house and land package is worth exploring over an established home if you’re in the market as an investor.

1. Save on initial costs

There are plenty of savings to be made by buying a fixed price turn-key house and land proposition, not to mention the fact that having a set price will take the stress out of buying an investment property, particularly if it’s your first.

In addition to not having any unwanted surprises, there is a substantial stamp duty saving when you buy house and land.

2. Claim costs on depreciation

Depreciation claims can be one of the biggest benefits to buying a house and land package as an investment rather than purchasing an established property.

For new homes, tax deductions can be claimed for depreciable assets including the cost of constructing the building as well as fittings and fixtures like curtains, blinds and floor coverings.

It’s a good idea to commission an expert to draw up a depreciation schedule. These usually cost a few hundred dollars but can be invaluable at the end of the financial year, saving time and money with the schedule setting out the depreciation over time.

3. Other tax benefits

In addition to depreciation, there are a range of other tax benefits that can apply to investment properties.

Investors may be able to claim interest on loans for investment properties, council rates, strata fees, advertising for tenants, water, cleaning, repairs, gardening and lawn mowing, pest control, insurance and property agent fees. It’s worthwhile checking with your accountant for a full list of claims.

4. Usually in growth areas

Getting in early and buying land in a new estate, particularly if it’s a multi-stage project, means you could be ahead of the pack and potentially in line for greater capital growth in the long run.

t’s a good idea to give careful consideration to the infrastructure planned for the area before diving in and making a purchase, but by buying land in an initial stage of a land estate can be more cost-effective than later stages of the same development.

5. Lower entry costs compared with established areas

Opting for a house and land package can be a considerable saving over an established home depending on where you are looking to buy.

6. Tenants prefer new homes over existing

Who doesn’t love the allure of something shiny and new?

Tenants are just like the rest of us. Having something brand new will almost certainly trump a rental that is a bit tired and rundown or needs maintenance work.

7. House and land packages can have good rental yield

One of the most important factors to consider when investing in property is rental demand.

As a landlord, you want to attract high-quality tenants who will stay long-term.

Demand for house and land packages is on the rise, as COVID-19 has highlighted some realities of high density living which are not for everyone. As a result, many people want to live in a larger brand new home with a lifestyle focus.

8. Low maintenance

Let’s face it, we’ve all got more riveting things to be doing than domestic maintenance, whether in our own homes or an investment property. For that reason, a brand new house can seem far more appealing to an investor than an existing property that may need time and effort in its upkeep.

9. Builder warranty

One of the big advantages of house and land is that the construction should be covered by a builder’s warranty if something goes wrong.

If the warranty is valid and you find a defect after settlement, this is likely to cover repairs so you’re not out of pocket. This will give you some peace of mind compared to purchasing an established home where it’s usually a case of buyer beware and you’ll be left ‘carrying the can’ if a problem arises.

10. Flexibility to help maximise your returns

Putting yourself in a prospective tenant’s shoes and considering their requirements or what might attract them to your property could pay dividends when it comes to maximising returns and retaining good tenants.

Perhaps opt for a floorplan that will make the property more appealing to renters, such as an extra bedroom or multi-purpose rooms that could cater for different living set-ups.