Invest in a display home to maximise capital growth and cash flow.
Property has long been considered a go-to investment strategy. By renting a home out you can generate an ongoing income. And if you chose smartly, the cash value of the property should also grow over time. What’s not to like?
No wonder then that many Perth homeowners and investors are keeping an eye out for left field property investment opportunities. Which brings us to estate display homes.
Ever wondered what happens to all those homes once they’re no longer useful? Turns out they’re not owned by the builders or developers – they belong to savvy investors like you.
Surprised? Let’s take a look at this smart investment strategy.
What are display homes?
Display homes are designed to show off what builders can deliver, allowing buyers to get a feel for the different floor plans, inclusions and finishes by walking through the finished product in real life. They are usually ‘spec’ed up’, fully finished with a high level of quality fixtures, finishes and landscaping so buyers can view the home in its prime.
Why do builders make display homes for sale?
This is a win-win for the builder and the investor. By selling the display home, the builder benefits by having the initial capital outlay covered. To make it more attractive to buyers, the builder agrees to rent the display home back at an attractive rate, for a fixed amount of time.
The holy grail of property investment
It’s easy to see why this is such an appealing investment strategy.
1. Home is built to a premium standard
2. Leaseback rate is high and commences immediately (no vacancy periods – your investment is cash flow positive as soon as it is completed)
3. Home and gardens are maintained immaculately at no extra cost (it’s in the builder’s best interest if they want the display home to impress).
Talk about the perfect tenant.
Of course, this all has an impact on your property’s value growth long term. When you invest in a display home, your property:
Is often located in an area with a high uptake of owner occupiers, creating strong demand for future sales
Is usually on a street that features other well-maintained high quality homes (like other premium display homes), which can boost the value of properties in the area
Has more extensive landscaping than standard homes with gardens that are well established by the time the leaseback period ends (just in time to rent out or move in)
Is built to a premium specification, which should attract higher quality tenants after the leaseback period ends
Leaves you with nothing extra to pay (the builder will cover maintenance and insurance).
Just imagine – a brand new two-storey home in The Heights Kardinya estate, with some of Perth’s best boutique shopping, cafes, bars and entertainment venues nearby, along with some of Australia’s most pristine beaches, convenient public transport and freeway access direct to Perth CBD, finished to premium specification, and leased back at a huge $783 per week for a full year. With
two 6-month leaseback options, this really is a no brainer.