Taking Investment Decisions on New and Old Buildings

When buying a property, which should you opt for? A new building, an uncompleted one or an ‘old school’ type?

Buying a house is perhaps one of the biggest financial commitments most people will ever make, so it is important to make the right choice.

The debate has been on whether it is better to buy a newly-built home or to opt for an old one that will require some renovation and remodeling. There is therefore, some believe where some real estate investors say that they will almost always opt for uncompleted houses as investment instruments when confronted between a new building and an old one.

With the increase demand for housing, builders and property developers are building new homes as fast as they can throughout the country. In some cases, new homes are being snapped up even before they are built, especially in some urban centres.

Some people prefer to invest in newly built homes, while others will rather put their money on existing ones with years of usage.

The major advantage of new homes over old ones is that they do not incur the additional maintenance and refurbishment costs often associated with modernizing an older property.

In deciding whether to buy a fully developed and recently completed building or an uncompleted one, the primary consideration should be the location of the property because it is the primary factor in determining the value.

If an investor has a choice and can afford to buy a house in an older settlement and another in a newer suburb, the former will command better value with a higher probability of recovering returns. But if the two buildings are in the same neighbourhood and the investor has limited resources, the uncompleted building may be a better choice because he will pay less for it, compared with a fully built one and still be able to alter the design and organized to complete the building.

Money tied down on an uncompleted building cannot be realistic unless the buyer is able to raise enough to complete it and put it to income-yielding use, except it is sold as it is. But the fully completed house can be leased and income realized on it.

A new building would be better for investment purposes because the design would be contemporary, while physical and functional obsolescence would not be a factor. In contrast, the old building would require significant financial outlay to redevelop, redecorate and resign. if the investor who buys an old house has to demolish and reconstruct the house, then the value of the land must be higher than that of the old building on it, otherwise, it   would not be worth the investment.

Often, buyers have a choice of colour schemes and selected fixtures and fittings, when purchasing a new property – ideal for those who cannot be bothered with redecorating or fitting a new kitchen or bathroom. However, it is important to establish whether these little luxuries come with the price or are additional expenses.

New homes tend to include all the latest energy-saving devices; thereby allowing buyers to enjoy reduces bills, as well as being kind to the environment.

Apart from the psychological satisfaction of living in a new house that has never been occupied, buyers of new homes have the advantage of having the structural details of the building, which may be missing in old houses, while the documents are easily verifiable because they can easily be traced.

As good as new homes may appear to the potential buyer; however, they also have some obvious disadvantages.

Prestigious homes are often professionally styled with expensive kitchens and bathrooms and designer accessories. Therefore, when viewing a showroom with the intention to buy, try to imagine how the house will look with your own possessions.

Buying a new home is obviously a big decision and it is vital to take time to weigh the pros and cons of living in a new property before parting with your money.

It is advised that you should always consider getting a structural survey done, especially if the home is more than a couple of years old. Though old homes may cost slightly less to buy than new ones, the cost of renovation may, however, override whatever savings the buyer hopes to get, nothing that no sooner than one gets through with replacing some old materials, than he will realize that there are many more awaiting a total clean out, thus raising the cost significantly.