With more brand new purpose-built rental properties popping up around Hamilton, there are opportunities for landlords looking to bolster their portfolios with modern, warm, well-insulated homes that will attract high-quality tenants.
There are several advantages to owning a new rental property, in contrast to an older home.
Keep reading to learn more about why investing in a new rental property might be a good option for you.
New builds attract quality tenants
High-quality properties attract high-quality tenants.
As new homes usually cost more to rent, you might be able to find better tenants who will pay the rent on time and take care of your property.
Tenants tend to value a new home because they perceive it as a well-insulated, modern, well-equipped property, and they are willing to pay more for it.
You’re also likely to experience lower tenant turnover with new builds because they tend to attract tenants looking for a longer-term home.
As a result, your home will be occupied for a longer period of time, enhancing your income potential.
Lower maintenance costs
Rental properties that are older generally require more maintenance.
With aging homes, more things tend to start breaking and need repair, potentially decreasing your income.
In contrast, new builds don’t need much maintenance.
Look for a building company that offers a warranty or guarantee scheme, which gives you some peace of mind that anything that goes wrong with the home in its first few years will be covered.
New builds can offer a great return on investment (ROI) for landlords.
As an example, a recent development in Hamilton East offers 125-sqaure metre properties for $720,000 with an approximate rental income of $660 per week.
That’s a gross ROI of 4.7%, a fantastic return considering average gross returns were as low as 3.2% during 2021 and 2022.
For comparison, the average price of an existing home in Hamilton is $776,000, which would generally attract lower rent than a new build.
Currently in Hamilton, the average rent for a 2-bedroom new build is $540 – $570 per week, while the average rent for a 3-bedroom new build is between $630 and $700 per week.
New builds are exempt from tax law changes
As a result of the changes to the law in 2021, landlords could no longer deduct interest costs from their rental income, which meant they would have to pay more taxes.
In the case of new builds, an exception was made so investors can still deduct interest on homes built after 27 March 2020.
This makes buying a new build more appealing for investors.
Build to rent scheme benefits landlord and tenants
New homes designed to become rental properties are becoming a popular option for investors.
In Hamilton, the Home Bakery is one company focused on building more homes that meet modern living requirements.
Its vision is to increase the supply of rental properties in Waikato and create the types of homes most needed in sought-after areas.
Many new developments focus on meeting the needs of home buyers, leaving a gap in the type of homes renters are looking for.
Also, as an owner of Glasshouse Property Management, the company can connect landlords with high quality ongoing care for their property and tenants.
The Home Bakery has several projects on the go, in addition to many already completed, with a goal of building 100 quality homes within two years.