One of the first big questions you will want to ask yourself when you start looking for your first (or next) rental property is whether to focus your search on new builds, or look at those with history. Each has pros and cons, and it really boils down to what you want from your investment, budget, and needs.
Those who have already been homeowners are more likely to have a very specific list in terms of what they want out of their next property, so this guide is focused on first-time buyers who want to make the best decision for their very first home:
Budget
First things first, you need to know that new builds are not necessarily cheaper than existing homes. There are, of course, a lot of factors that go into how affordable each option is over the other. For example:
- Upfront cost: You may find that new builds actually have a higher upfront cost than older homes.
- Renovation costs: Older homes, of course, often come with more fixes, from simple essential updates like a new boiler, to a full renovation to suit your tastes.
- Upkeep costs: Older homes also tend to be more energy-intensive, in comparison to newer ones, so that ongoing costs may be higher.
- Fees: Flats and other types of leaseholds often come with ground rent and service fees, which don’t apply to freeholds.
- Cost-per-square-metre: Another option is to consider the cost per metre, but this will depend property to property.
There is one other option, of course. You could, for example, invest in one of https://heatongroup.co. uk/ off-plan properties, meaning you can actually buy the property for below market value. This is a great way to save on the upfront cost, and then on the ongoing costs since your new property won’t need any work (or very little decorating work) to get it ready for market.
Effort
Not everyone is cut out to be a DIY master. Not everyone has the budget, headspace, or patience for a full renovation – even if they don’t physically have to lift a finger except to call a phone number. If this sounds like you, then a new build is the perfect option for you. New builds are ready to rent out practically from day one, meaning you can start recuperating your investment costs immediately.
Of course, existing homes might have a better location, or features that most modern new builds don’t. This can potentially mean higher rental yields. That’s why it’s important to do a full cost analysis to understand the cost-versus return for the next five, ten, and 30 years.
Time
Another key factor is time. If you wanted to start expanding or starting your portfolio ASAP, for example, then you’ll need to stick with what’s currently on the market with no forward chain. Otherwise, waiting can help you find the best property for your investment interests. For example, you could save upfront by buying a property that hasn’t yet finished being built.
Amenities
One last consideration is the amenities and features that the property offers that you, in turn, can offer immediately to your tenants. New builds often have community-building tools like apps or forums designed to help encourage tenants to make friends and meet one another. Older homes don’t have this, but might offer more space, or perhaps proximity to a cherished high street.