For investors looking to buy real estate<\/a>, there\u2019s two options; buying new or established. And for one leading property advisor, the answer about which is best is simple.<\/strong><\/p>\n Michael Yardney, director of Metropole Property Strategists, says for the majority of investors, established property is a far better option than investing in a new development. This is because capital growth potential is greater with established, he says.<\/p>\n Yardney says those buying a home to live in can be forgiven for being dazzled by \u201cshiny-new\u201d properties, but \u201cin the real estate game, new is definitely a no-no if you\u2019re looking for the ideal investment.\u201d<\/p>\n \u201cNew is definitely a no-no if you\u2019re looking for the ideal investment,\u201d says \u00a0Michael Yardney. Picture: Getty Images<\/p>\n<\/div>\n The only exception is if an investor can afford to be a developer, Yardney says. \u201cIf you can build a new project at cost, by all means go for it!\u201d<\/p>\n When buying a new property, buyers don\u2019t just pay for the actual house, they also hand over a heap of cash straight to the developer, Yardney explains.<\/p>\n \u201cThis is because to make a profit, they build not only their margins into the price, but their marketing costs. Therefore, you end up paying a premium,\u201d he says.<\/p>\n By \u201cbuying well\u201d \u2013 either at or below the property\u2019s intrinsic value \u2013 in the established market, investors can end up paying below replacement cost and make a capital gain almost instantly, Yardney says.<\/p>\n When buying established, buyers can negotiate a great deal and pay a fair price, as well as enjoying immediate capital growth in most instances, he says.<\/p>\n \u201cAdditionally, buying an established property that needs some TLC can mean paying substantially less than it might be worth if you have the ability to look past the cosmetic flaws and see the potential.<\/p>\n This Sydney home underwent an incredible transformation, making the renovator a tidy profit. Picture: Cherie Barber<\/p>\n<\/div>\n \u201cOften you will have less competition for tired or messy buildings because most people just see too much hard work,\u201d Yardney says.<\/p>\n Then investors can value-add with smart renovations and cosmetic upgrades, something that\u2019s hard to do in a new development, where everything is done.<\/p>\n It\u2019s possible to turn a $40,000 refurbishment into an extra $60,000-plus in capital gains and increase rental yield at the same time, he says. \u201cThat\u2019s something that is simply not possible to achieve with new property.\u201d<\/p>\n Location also plays a big role, he says. If a new property is in a relatively immature area, like a housing<\/a> estate, it\u2019s harder to research potential value.<\/p>\n \u201cWith this type of property, you have less historical data at your disposal to make an informed decision when it comes to pricing<\/a> and less comparable property sales.\u201d<\/p>\n In a slowing market, established property holds its value better than new too, he adds.<\/p>\n He says established property will generally outperform the averages over the long term and \u201cboast excellent capital appreciation, without taking too savage a beating during lulls in the market.\u201d<\/p>\n See our\u00a0investing tips on what to look for when shopping for an apartment.<\/strong><\/em><\/p>\n
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