Is it better to buy a new or old investment property?

Property investors often face the dilemma of whether to buy a new or old investment property. Investors need to weigh up the pros and cons of both before deciding.

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

Are you better off investing your hard-earned cash into an old property that offers value-adding and equity building potential, or a brand new property that guarantees higher tax and incentives and lower maintenance costs?

While the value of a property is influenced by several factors, the decision to buy a new or established dwelling is just one of many issues to consider when buying an investment property.

Buying a new property

New investment property

Pros

  • Depreciation benefits. If you’re an investor, the newer the property the higher the amount of depreciation available to you. You can deduct 2.5% on the property itself for 40 years which can lead to a significant tax deduction. Appliances such as air conditioners and dishwashers generally have a high rate of depreciation. For more information about the tax benefits available to you, visit the Australian Taxation Office (ATO) website.
  • Tenant appeal. Typically new dwellings are perceived to be higher quality which means you may have greater tenant appeal. This is because tenants will be attracted to modern appliances and technologies such as reverse cycle air conditioning and will be prepared to pay a premium. The ability to attract high quality tenants could mean that you lower the risk of untenanted periods for your investment property.
  • Protection. Builders of new properties in Australia are required to take out home warranty insurance which protects you in the event of a major building defect.
  • Low maintenance. When you buy a new property, you can benefit from the convenience of not having to spend money on repairs or ongoing maintenance.
  • Security. Most items for a new property are under warranty which means you can minimise your ongoing costs as they are covered by builder’s warranty insurance.
  • Government incentives. There are stamp duty concessions and grants available for first home owner grants when buying off the plan which could significantly reduce your upfront and ongoing costs.

Cons

  • Less affordable. Depending on the location and property type, new dwellings are generally more expensive than established dwellings which could mean that you struggle to meet your repayments. In addition, new properties often have high strata fees associated with maintaining communal facilities such as gyms and pools which could harm your cash flow.
  • Limited value-adding potential. There is little opportunity to add value to the property once you’ve purchased it so it may take longer to achieve capital growth.
  • Greater market risk. New properties are often the first to see price declines when the market softens, while established properties will either maintain their price value or experience a minimal adjustment.

Buying an old property

Established investment property

Pros

  • Renovation potential. A major advantage of buying an established property is that you can renovate and add value to the property which can boost your equity. These renovations are often tax deductible.
  • Affordability. An established property is generally more affordable than a new property which means that you may be at less risk of facing mortgage stress levels. Enter your details in the calculator below to see how much you need to earn to live in the suburb of your choice.
  • Property history. Historical data about the property will give you an idea of how the property value has changed over time which can help you make an informed decision.
  • Negotiating power. When you buy an established property, you have the ability to negotiate for a fair price. Vendors of established properties often have a motivation to sell relatively quickly so you can use this to your advantage to negotiate a bargain.
  • Capital growth. Generally a well-bought established property will outperform the averages over the long term and experience high capital appreciation which will benefit your long-term cash flow.

Cons

  • Maintenance. An older property may require upgrades and repairs due to wear and tear on the property over time. Not only could this eat into your profit, if a major renovation needs to take place, this could mean that you risk loss of rental income if tenants need to temporarily vacate.
  • Lower rental return. If the property is run down, the rental return will typically be lower compared to a new property.
  • Less appeal. Established properties typically have less appeal than new properties as they may have an outdated design.

Property investor? Protect against the worst with landlord insurance

Start comparing loans for property investment today

$
years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Athena Variable Home  Loan
2.39%
2.39%
$0
$0 p.a.
60%
$585.25
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.
UBank UHomeLoan Fixed
1.99%
2.70%
$0
$0 p.a.
80%
$554.81
Limited time offer.
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Greater Bank Great Rate Fixed Home Loan
1.89%
3.85%
$0
$0 p.a.
90%
$547.35
Lock in a competitive investor interest rate for 1 year, with just a 10% deposit required to secure this low-rate home loan. NSW, QLD and ACT residents only.
loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71%
$0
$0 p.a.
80%
$554.81
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
Mortgage House Advantage Investment
2.44%
3.11%
$0
$10 monthly ($120 p.a.)
80%
$589.12
This fixed investment loan has a 100% offset account. Principal-and-interest repayments. Requires a 20% deposit.
Well Home Loans Balanced Fixed Home Loan
2.29%
2.29%
$250
$0 p.a.
90%
$577.55
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
homeloans.com.au Low Rate Home Loan with Offset
2.59%
2.42%
$0
$0 p.a.
60%
$600.83
This competitive variable rate loan is for investors who want interest-only repayments. You will need a 40% deposit.
UBank UHomeLoan Variable Rate
2.74%
2.74%
$0
$0 p.a.
80%
$612.67
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Suncorp Home Package Plus Fixed
2.28%
3.15%
$0
$375 p.a.
80%
$576.78
Borrowers with 20% deposits can lock in a low fixed rate loan for three years. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
homeloans.com.au Low Rate Home Loan with Offset
2.39%
2.41%
$0
$0 p.a.
80%
$585.25
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.
Newcastle Permanent Building Society Fixed Rate Home Loan
2.29%
4.11%
$0
$0 p.a.
95%
$577.55
$2,000 refinance cashback
Competitive fixed rate for home buyers.Available with a 10% deposit.$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Athena Variable Home  Loan
2.59%
2.48%
$0
$0 p.a.
80%
$600.83
A competitive investor variable rate that falls as you build equity.
UBank UHomeLoan Fixed
2.24%
2.64%
$0
$0 p.a.
80%
$573.72
Pay no ongoing fees on this investment loan fixed for 3 years.
ME Flexible Home Loan With Member Package
2.98%
3.43%
$0
$395 p.a.
80%
$631.88
Package loan for investors making principal-and-interest repayments. Low fees and 20% deposit required.
Well Home Loans Balanced Variable
2.24%
2.27%
$250
$0 p.a.
80%
$573.72
If you're an investor with a 20% deposit saved you can get this low rate mortgage. Not available for construction.
UBank UHomeLoan Fixed
2.49%
2.67%
$0
$0 p.a.
80%
$593.01
Lock in a 5 year fixed rate on your investment loan and pay no ongoing fees.
Athena Variable Home  Loan
2.49%
2.43%
$0
$0 p.a.
70%
$593.01
Athena's refinance offer for investors and owner occupiers.
UBank UHomeLoan Variable Rate
2.6%
2.65%
$0
$0 p.a.
80%
$601.61
Pay interest only repayments with this special offer for investors.
IMB Fixed Rate Home Loan
2.35%
3.33%
$449
$6 monthly ($72 p.a.)
90%
$582.16
NSW and ACT customers only. A 3 years fixed rate investor which allows extra repayments to be made.
Well Home Loans Balanced Variable
2.87%
2.90%
$250
$0 p.a.
90%
$623.03
Competitive variable investor mortgage to fund your property portfolio. You can add a 100% offset account for just $10 a month.Not available for construction purposes.
ME Basic Home Loan
3.28%
3.30%
$0
$0 p.a.
80%
$656.36
A no frills home loan for investors.
UBank UHomeLoan Fixed
2.09%
2.71%
$0
$0 p.a.
80%
$562.33
Limited time offer.
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender. Apply by 30 June 2021 and settle within 90 days to get this low rate.
ME Flexible Home Loan Fixed
2.64%
4.86%
$0
$0 p.a.
80%
$604.76
Lock in the rate on your investment loan with one year. Requires a 20% deposit.
Athena Variable Home  Loan
2.69%
2.52%
$0
$0 p.a.
70%
$608.71
Investors with 30% deposits can get this fee-free variable rate loan. This loan has interest-only repayments.
homeloans.com.au Low Rate Home Loan with Offset
2.69%
2.52%
$0
$0 p.a.
80%
$608.71
A competitive rate with no application or ongoing fee. This loan is not available for construction.
loading

Compare up to 4 providers

eChoice Logo

Enter your details below to receive an obligation-free quote from an eChoice home loans expert today

Are you currently employed?

Have you found a property yet?

eChoice is an award-winning broker with over 18 years of experience, and has helped more than 50,000 Australians to find the right home loan.

  • Completely free, expert home loan advice.
  • Offers a suite of digital tools to make you a smarter borrower.
  • Calculate your borrowing power with a free personalised home loan report.

eChoice Lender Logos

Technology Platform of the Year 2016

Australian Broking Awards

Images: ShutterStock

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site