6 Reasons investors prefer newer properties over older ones

If you are reading this article, you are probably a property investor or are planning to be one. As an investor, a common worry is around attracting tenants into your property and making sure your property is in high demand for prospective tenants. Overseas investors can only buy a newly built property and most of you have purchased modern homes that are being built or have been built over the last 5 years or so. In the next few paragraphs, we will demonstrate to you why you are at an advantage for owning a newly built property, and why such properties are highly coveted by tenants (instead of older properties).

Lower utility bills for tenants:

The cost of running a new house is lower than an old house. Rents maybe a bit lower on older homes, however, because of the design and insulation requirements, the utility bills such as gas and electricity are much higher on these old homes. Newer homes don’t leak air as much and are built to ‘6 star’ energy efficiency. Tenants are conscious of these costs and because rents will keep increasing due to Australia’s housing shortage, people want to keep utility bills low.

Less maintenance hassles:
Even though tenants don’t pay for it directly, no one likes to deal with the maintenance hassles that come with old properties and old or damaged fittings. Research has shown that renters would pay that little extra in rent to avoid maintenance disruptions and having to stay at home whilst an old faulty stove, air conditioner or water leak is being repaired by a technician. As a property investor, this is a win-win situation for you because you don’t need to pay high costs for repairs, and you own the kind of property tenants are looking to live in.

Attracts more long-term tenants
Leading on from the issue of fewer maintenance hassles, new properties are more likely to keep a tenant long-term because it’s easier living for them. The house is not worn out, it looks aesthetically pleasing and is designed to modern needs. These simple factors make it more liveable for renters and they tend to stay longer, especially if their utility bills are low and they enjoy a better quality of life in their rented property. On the other hand, older houses may attract temporary tenants, who live there till they’ve saved up to move to a better home with less maintenance issues. Most likely, those people move from the old homes to modern properties such as yours.

Modern layouts are preferred by tenants.

Open floorplan and layout make properties look more spacious. The aesthetics such as colour schemes and materials are attractive to modern tastes. The newer homes are designed to provide much better light because old properties were built to old style floorplans with separate rooms to keep the heat in, which is not suitable to Australia’s climate.

Gas/electric
Most newer homes will now have electric heating, cooking, and hot water – although there will be little to no change for owners paying for a new build. Tenants are already choosing newer homes (5yrs or less old), and whilst some prefer the responsiveness for gas cooking, others prefer electricity due to some of it being sourced from renewables. Either way when the tenant pays for the ongoing utilities, their biggest concern is the total amount of energy they are billed for, and hence a modern, well insulated home is very important to their budget.

Low garden maintenance.
Older homes usually come with large yards and gardens. While this seems great in theory, maintaining the garden regularly and with discipline is a lot of work. Sometimes, it may require up to 8 hours a week. Own-stay owners may happily spend a lot of their time gardening, such as retirees, as they are house proud. However, tenants are not that motivated to maintain a garden they don’t own and prefer low-maintenance yards. Plus an unmaintained garden looks unsightly and tenants want to mitigate this hassle altogether and opt for easier living.

Summary:

The information above is something you probably already know. But we want to re-assure you that you are on the right track with Resimax Group’s and Tick’s modern, high-quality homes, which are designed to attract more tenants and keep your rental flow secure.

Disclaimer: This article is for general information purposes only and should not be taken as advice. Always seek professional advice from suitably qualified professionals familiar with your situation and goals.

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Steven Molnar is Head of Research and Education for Resimax group. With over 25+ years in property and finance in Australia and internationally, he brings a unique perspective to his blogs with interesting property insights.

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