Traditionally property investors buy into new house and land packages because they want to invest in real estate but many like the tax benefits of new property.
Higher rentals and house depreciation
New properties set the benchmark for the highest rentals because they are new, but the benefit that many high income earners want is the depreciation of the building. The land will generally always go up in value (and so too does the cost of building a new home) but the one that has just been built will now begin to depreciate in value and that can be claimed as a cost of ownership.
Because a property depreciates an investor can reduce their taxable income by this depreciation amount.
High income, positive cashflow investment properties
Some high income earning investors don’t mind if the rental income they earn is low in the beginning because it adds to their total tax deductions. These investors also understand that as the value of their property increases over time so too the rental income will increase in the future. After 5-7 years their property will be cashflow positive.
Having said that more and more investors want their investment property to be cashflow positive so that it pays for itself and there are a couple ways to achieve this.
Invest in a granny flat development
Commonly known as a granny flat, a secondary dwelling (usually at the rear of the property) is a great way to increase the rental income from an investment property.
Buy a dual key property
A dual-key property is similar to a Duplex or semi-detached house in that it’s one house with a central wall which divides two dwellings. It enables you to have two incomes for what is essentially just one building.