Why Buying a Display Home is a Smart Investment
When it comes to investing in property, one of the biggest considerations is deciding whether to buy an established home or build a new one. There are advantages and disadvantages associated with both options, and neither one is without its challenges. Existing properties can be plagued with maintenance issues and may require costly renovations to become fit for the rental market. On the other hand, the building process can become quite arduous. While it may be rewarding to select floor types and colour schemes when constructing a home of your own, when you’re building for investment purposes, making such selections can quickly become a burdensome and time-consuming task. Then, once you enter the construction phase, all sorts of problems can surface, from time delays to building errors and more.
There is, however, a third option. One that mitigates many of the issues that can arise from buying existing or building new. Fully finished and near new, display homes offer the perfect middle ground between the two main roads to investing in property. It’s an alternative option that is not as widely discussed as the traditional choices, but it’s one that comes with a lot of benefits and, in some instances, minimal risks.
Guaranteed Rental Returns
Ordinarily, there’s no such thing as a ‘guarantee’ when it comes to any type of investment, but when you purchase a display home, you get to play by a slightly different set of rules.
Display homes are built for several purposes, from providing a tangible example of a builder’s capabilities, to serving as a marketing tool and even a sales office. Builders in Perth will put display homes up for sale while the property is still in use, offering a leaseback arrangement as a sales incentive. Essentially, the builder will commit to renting the display home from its new owner for a set price over an agreed upon period of time. The rental period could be six months or several years, depending on how long the builder requires the services of the property.
As the owner of a display home in a leaseback agreement, you are guaranteed to receive the specified weekly rental payments over the full duration of the contract, regardless of market fluctuations. Meaning, in the event the market takes a downward plunge, you won’t incur any reductions in rental yield, and you will always receive the full rental payment each week.
The Perfect Tenant
On top of guaranteed rental income for a set time period, you will not need to engage a property manager or pay any corresponding fees. There will be no need to promote the property or attempt to find an amenable tenant as you already have the perfect tenant in residence.
For the duration of the leaseback period, the builder is your tenant. While the builder will hold viewings and meetings within the property, there won’t be anyone actually living in the home day to day, which means your investment will experience very minimal wear and tear. As the display home is a reflection upon the builder, it will be kept in pristine condition at all times, with regular professional cleaning. Plus, you can even visit the property yourself during home open times. With the builder taking care of your property, you can rest easy with complete peace of mind in having a reliable and trustworthy tenant that isn’t secretly conducting illegal or damaging activities.
When selecting a location to construct a display home, a builder will conduct thorough due diligence to identify an area with strong growth prospects. From analysing past performance to researching planned developments in the area, the builder has taken everything into account to ensure it is investing in the best possible suburb. In most instances, the builder will seek locations within the vicinity of major amenities, including shopping centres, schools, medical facilities, recreational facilities, entertainment precincts and more. These locations will usually have convenient access to public transport and key road networks and will generally be counted among areas that most would consider to be a desirable place to live. In Perth, for example, popular areas such as Baldivis and Dayton have proven to tick all the above boxes, with the former among one of Perth’s best-selling areas (REIWA, April 2019).
Designed to Impress
At the end of the day, the core aim of a display home is to entice potential buyers to sign with its respective builder. Display homes are the ultimate opportunity for a builder to showcase their best designs and demonstrate the quality of their craftsmanship. Almost every display home in existence has been completed to the highest possible standard with upgraded inclusions inside and out. From the splashback and tiling selections to the landscaping and alfresco areas, every element of the home demonstrates the highest specifications, with premium fixtures and fittings.
As an investor, you can be sure that you’re buying into a high-quality property with superior aesthetics, but there could be even more in store for you. The builder is likely to engage a professional interior designer who will style and furnish every part of the home to make it as attractive as possible to potential buyers. Many builders will happily provide you with the furniture at the end of the leaseback period, or at least offer it to you at a heavily discounted price.
With so much to be gained from investing in a display home, those in the know will pounce as soon as a property becomes available. Link Residential Group have a select range of display homes for sale in Perth, with leaseback arrangements that offer 6% rental returns, guaranteed. The Group also offers a range of never lived in ex display homes with strong investment potential. Contact Link Residential Group today to discover our display home investment opportunities.