NEVER Buy These - New VS Old Property in Australia 2025

Summary

In this video, the speaker emphasizes the pitfalls of investing in new properties compared to established ones. They highlight the importance of understanding market dynamics, such as growth potential, depreciation implications, and tenant demand. Established properties tend to appreciate better due to limited supply, while new properties often come with hidden costs and liabilities. The speaker encourages investors to actively engage in learning and managing their investments rather than relying on superficial guarantees from property investment companies. Ultimately, investing wisely in established properties can lead to greater financial success.

Takeaways

• 😀 Don't fool yourself: Self-deception is common in property investment, especially regarding new vs. established properties.
• 🏠 New properties often underperform in growth due to oversupply and less demand in fringe areas.
• 📉 Depreciation isn't free money: Selling a property means paying back significant depreciation to the tax office.
• 🔍 Tenant appeal is a myth: Established properties often attract tenants better than new ones in competitive markets.
• 🛠️ Maintenance costs: New properties may have lower maintenance initially, but established properties can offer better growth potential.
• 💰 Value add potential: Established properties allow for renovations and value-adding strategies, which can significantly increase equity.
• ⚠️ Rental guarantees can mislead: They're often baked into the purchase price, masking potential market risks.
• 🌍 Scarcity drives value: Established properties in desirable areas appreciate better due to limited supply.
• 📊 Education is key: Understanding the market and property investment is crucial for success; don't rely solely on agents or companies.
• 🏆 Long-term strategies: Building wealth through property takes time and effort; quick fixes from new properties are rarely effective.

Q & A

What is the main principle emphasized in the video?

The main principle is to not fool yourself, as self-deception is a common mistake in property investment.

What are the two main types of properties discussed?

The video discusses established (old) properties versus new properties.

Why does the speaker argue against buying new properties?

The speaker argues that new properties often underperform in growth due to oversupply and that they come with depreciation liabilities.

What does 'land to asset ratio' mean, and why is it important?

'Land to asset ratio' refers to the proportion of the purchase price that is attributable to land. It's important because land appreciates, while buildings depreciate.

How does depreciation work for new properties, according to the speaker?

While new properties offer significant depreciation benefits initially, when sold, a portion of that depreciation must be paid back to the tax office, creating a future liability.

What is the misconception about tenant appeal in new versus established properties?

The misconception is that new properties are easier to rent out; however, established properties can attract tenants effectively if located in the right area.

What are the maintenance cost considerations between new and established properties?

New properties may have lower maintenance costs initially, but over time, the higher growth potential of established properties may outweigh the maintenance savings.

What does the speaker suggest about the potential for value addition in properties?

The speaker suggests that established properties offer more opportunities for value addition through renovations or developments, unlike new properties.

What does the speaker imply about the role of property investment companies?

The speaker implies that many property investment companies may prioritize their profits over clients' best interests, often promoting new properties for their own financial benefit.

What should potential investors do before making property investment decisions?

Potential investors should educate themselves, conduct due diligence, and consider the long-term implications of their investments rather than relying solely on property investment companies.