Why House and Land Packages Are An Excellent Investment

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The NSW property market has undergone an interesting swing in the past 12 months. While prices in regional areas have remained strong, several inner suburban areas have flattened or dropped.

House and land packages, in particular, are experiencing heightened interest as a range of buyers are recognizing an untapped potential for future growth and return on investment. This potential has been spurred on by a range of influencing factors, including:

  • Government incentives
  • Expansion of infrastructure and amenities
  • Shift towards remote offices and working from home
  • Quality of life in regional areas
  • Larger block sizes

House And Land Packages Are An Excellent Investment

With so many positives in their favor, house and land packages are fast becoming an attractive proposition for those looking for short and long-term gains.  After all, as with any investment opportunity, it all begins with the bottom line.

Savings

Savings On Land Packages

When doing the sums on investing in established homes over house and land packages, there is a strong case to make for the latter.  To begin with, only paying stamp duty on the land component of a house and land package can mean thousands in savings.

Additionally, recent changes to government regulations surrounding depreciation of P&E (basically fixtures and fittings) in investment properties mean that you may be eligible to claim many thousands of dollars in depreciation each year as the original purchaser.

Tax Benefits

Tax Benefits

Negative gearing is the ability to claim on a property that has been purchased, at least in part, by borrowed funds and where the net income from the rent after expenses is lower than the interest on the borrowed amount.

Property investors use negative gearing to reduce their income tax, which is substantial.  In 2010 – 2011 alone, negative gearing reduced personal income tax revenue by $13.2 billion.

You can also claim deductions for costs incurred while renting out the property at tax time, such as agent’s fees, maintenance, and replacement of appliances.

Quality Investment

Quality Investment

A high-quality new home is more likely to attract a higher rental yield, which can translate to better tenants.  The key to successful long term property investment is three-fold – tenants who:

  • Pay the rent
  • Take care of the property
  • Want to remain long term.

Advertising and agency costs can add up, so having settled and happy tenants make good financial sense.

Comparing an inner-city apartment with a similarly priced, substantial outer suburban house and land package can be startling.  With rental expectations around the five percent mark for the home and land compared to almost half for apartments, you begin to see where the real value lies.  Add to this what you get for your money; a substantial family home compared to a tiny floorspace apartment.

The newly built home will also be backed by a builder’s warranty for the first few years of its life.  A tiny apartment with ongoing body corporate fees, attracting lower rental yields and low quality of tenants, can’t compete.

Set And Forget

A major attraction for investors is putting their money into a property that won’t place a constant drain on their bottom line. However, with tenants rightly being entitled to live in a home where everything works and is in good order, older properties can be a constant money pit for landlords.  It can seem as soon as one problem is fixed, another one arises – from a new dishwasher to a replacement air conditioner.

A new home should remain maintenance-free for many years.  At the design stage, they can be optimized to be economical to run and to withstand the harsh demands of a high turnover of tenants by including:

  • Stone benchtops
  • Wear-resistant flooring
  • Solar panels
  • Low maintenance landscaping with hardy plantings

On top of all the aforementioned benefits, the house and land package provides investors with a physical asset that will grow in value and be utilized as a residence later So, no matter what stage of life you are at, consider the advantages of investing in property as a clever way to begin the path to a comfortable and lucrative retirement.

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Preeti Shah is a person who loves checking out different styles and designs of houses. She took interior designing in college and is practicing in the field of home improvement for five years now. In her spare time, she is usually searching the web for interesting and fascinating home designs.

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