If you build the right property, it ensures that it would always be rented and that you get the rental yield that you’re after.

With interest rates at an all-time low, many people are considering building as an investment. Some of the advantages of building new include: 

Dual occupancy potential

You have the potential to build the property so it could house more than one group of tenants. Potential options include building a granny flat, a duplex or a subdivision. This could improve your investment income. You may obtain a better rental return building a three plus two bedroom property as opposed to a five bedroom property.

Potential for better, long term tenants

Building a new investment property can also have the benefit of attracting long standing tenants who are happy to preserve and maintain the new property after they have moved into. This reduces the risk of the property being unoccupied and expensive repair bills. 

Depreciation available

When you build a new property, you get to depreciate the cost of construction of the building over a number of years. You also get to depreciate the internal fixtures and fittings, because those items are brand new. 

Target your build for the market

You can speak to real estate agents regarding where to build and what items prospective tenants may be prepared to pay more for. You can then tailor your build to suit. If you build the right property in the right area, it will improve the chances of that it being always rented.

Potential for equity

You can contact your lender after construction is completed to have the property re-valued. If you have paid the right price for the right property, you may be rewarded with an increased property value – instant equity. This equity could be used to springboard into another property.

Government grants and incentives

You may also be eligible for Government grants and incentives that encourage building. There are long-term and short-term grants as well as other incentives, such as relief from stamp duty.

Speak with your accountant to see if building an investment property is a sound wealth strategy for you.

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