Summary of "Pros and Cons Of Building A House vs Buying Pre-Existing Houses in 2024 | The Landlord Society EP26"

Podcast Episode Summary

In the podcast episode titled "Pros and Cons Of Building A House vs Buying Pre-Existing Houses in 2024," hosts Charlie and HDK discuss the advantages and disadvantages of building new homes versus purchasing existing properties in the Australian property market.

Buying Existing Properties:
- Opportunity for Depreciation: Existing properties have often depreciated, allowing buyers to focus on the land value rather than the building.
- Renovation Potential: Established properties can be renovated, which can also lead to tax benefits through depreciation.
- Location Importance: Emphasis on purchasing properties in good locations to maximize potential value.
Building New Properties:
- Tax Benefits: New builds offer depreciation benefits that can offset income, though this is not the primary aim for buyers.
- Fresh and Low Maintenance: New homes come with modern amenities and require less maintenance initially.
- Government Grants: There are grants available for first-time owners that favor new builds.
Risks of Building:
- Cost Overruns: Fixed-price contracts can lead to disputes if material costs rise, often resulting in builders asking for additional funds to complete projects.
- Owner-Builder Risks: Attempting to save costs by being an owner-builder can lead to delays and increased expenses.
- Market Volatility: The building industry is facing increasing material and labor costs, making it a speculative endeavor.

For Buying Existing Properties:
- Focus on properties in established areas with renovation potential.
- Assess the feasibility of renovations and potential return on investment.
For Building New Properties:
- Consider paying a larger initial deposit (e.g., 20%) to lock in material prices and reduce future cost risks.
- Research and select reputable builders who can manage projects effectively.
- Understand the implications of the building project on future property values.