You know that investing in property is a good way to build wealth, but you’re not entirely sure what sort of property to invest in first.  There are many schools of thought around how to create the most effective investment portfolio and whilst we are not financial advisors, we can share our experience, and the advantages, of building new properties for investors.

Building a property investment portfolio

Creating and growing a property investment portfolio takes time, research, effort and a little luck!  Typically, your first investment property is bought with a large chunk of savings OR by using equity in your primary place of residence.  Ideally then you continue to build your portfolio without having to use any of your ‘own’ money – you simply keep using the equity in the properties you own. 
 
The key to a successful property investment portfolio is to include properties in areas with good capital growth potential, buy homes you can add value to through renovation, buy homes that are attractive to renters (good services, location, facilities, affordability), and/or build a new home in an area with high rental yields.  As with any kind of investment, diversity is often a good rule of thumb.

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Benefits of building a new dwelling as an investment property

There are a number of factors that determine a property’s intrinsic value: location, land size, design, history, local community, socio-economic environment, local amenities, transport and proximity to employment.  All these factors must be considered before making a purchase (of either a new or existing dwelling), as they will affect the rental return and ultimate success of your investment portfolio. 
 
There are however, some key benefits to building a new dwelling as an investment property as opposed to buying an existing one. 
 
The newly built home will:
  • Be more energy efficient and environmentally-friendly than an older property
  • Have lower maintenance costs
  • Reduce your risk due to the builder’s warranty and new appliance warranties
  • Attract higher-quality tenants,
  • Potentially create two income streams by building a dual occupancy home, or take advantage of your existing block and live next to your renters!
  • Achieve higher rental returns
  • Typically have lower vacancy rates
  • Have a higher claimable depreciation value
  • Result in better, more consistent cash flow, which normally equates to a higher resale value 

Deductions you can claim when building an investment property 


If you choose to build a new home as an investment property you have a range of depreciation costs available to you.  Not only can you depreciate the cost of that actual construction of the building, but also the fittings and fixtures inside the home.  As everything will be brand new, you can claim maximum depreciation.  This could make the difference between a positively and negatively geared property, or if the property is already positively geared it can save you in taxes.*  

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Building wealth through property investment

Wealth creation through property investment is a very real and achievable goal for many Australians.  Good planning and advice is paramount however.  You don’t want to over capitalise in an area that’s not growing or build a home that is not suitable for, or attractive to, your ideal tenant. 

 
If you decide you would like to build a property to add to – or start - your investment portfolio, working with a volume builder such as Metricon is a great place to begin.  We have plenty of experience building dual occupancy developments and single dwellings for investors and will reduce the stress and complications often associated with building and investing in property.  We know how to create a home that provides great returns now and into the future for you. 

To learn more about the Dual Occupancy process and to see how you could realise the potential in your own property, watch The DualOcc Diaries - an eight part series following the Dual Occupancy build journey of Metricon real-life customers Shane and Bridget Yole.

*Please see your accountant or financial advisor for specific advice on depreciation and taxation.