Have you ever thought about investing? For most people, investing offers a chance to increase capital, gain returns and secure your financial future. But what type of investment best suits your needs? Whilst many may consider a conventional property or shares. This is principally because investors believe there is a fixed return on these investments. However, considering the income potential for investors, buying a display property is highly recommended! If you have been thinking of investing in a display home, but are unsure of the process, read on to find out the benefits that you may receive.
What is a display home?
Display properties are homes that are built in a display village. These homes are designed to give buyers an idea of what their house design will look like upon completion. Buyers get a chance to walk into the house, examine the fittings, room sizes and where necessary, ask for aspects of the home to be altered to suit their needs.
Once they have looked at these houses, they can then decide whether or not they want to build a house with a similar design and whether the design will suit their needs.
Why are they a good investment?
The reason display homes are considered such an excellent and profitable investment is because of the lease back option, which guarantees rent, often at above market value.
Whilst the home may not bring in the same rental return once the lease back period is over, the short term benefits are enticing. The long-term returns are harder to predict and depend largely on the state of the economy at the time.
Further, because the tenant is the builder, and the house is only having walk-ins, the house stays in better shape. If regular tenants were to live in the house, especially larger families, the house is likely to get damaged. Thus, there is less chance that the tenants will damage the home, and if they do, it is easy for the builder to rectify it.
Purchase by an investor
Generally, a builder will construct a display home and an investor will then purchase the display home and lease this back to the builder to use in the display village. Builders typically look for areas where there is a big residential boom, and then begin construction. After construction has been completed, builders may approach investors, or vice versa, to purchase the property, with a "lease-back option."
The lease-back option is entered into by both the new owner of the property and the builders for a term lasting a 12 to 60 months. The builder then displays the home as a model to other potential buyers for the term stated in the lease agreement. Generally, this will last until the entire development has been completed and the home is no longer being used as a display home. This means that the investor is guaranteed rent for the entire term of the lease back option. This is a great incentive for investors looking to buy display homes.
Benefits for investors
High-end developers often fit out the home with all the latest fittings, at no additional cost to the investor.
Most builders will add in as many features as possible to make the home look as attractive and luxurious as possible, so that builders are able to demonstrate the possible added features that are available with the home.
This often means that the home is immaculately landscaped and includes upgraded appliances as well as timber decking, outdoor kitchens and the very best floors, furniture and fixtures available. Because of all these extras, the home is worth more. This means that when the investor decides to re-sell the property, they will get more!
Display homes are always found in the best locations of a development and are always surrounded by homes of similar quality and appeal, meaning the value of the home is more easily maintained and the property is usually very marketable and readily saleable.
These properties do not require an investment owner to handle maintenance problems. For example, with a traditional investment property, when a renter encounters a problem such as a faulty water heater, it becomes the responsibility of the property owner to immediately address and correct the issue for the tenant.
Tips
Investing in a display property is a great option for investors who want a rental guarantee on a property at above market value. The property will stay in better condition than a regular rental, and it usually comes with added extra features and fittings.
Display properties are homes that are built in a display village. These homes are designed to give buyers an idea of what their house design will look like upon completion. Buyers get a chance to walk into the house, examine the fittings, room sizes and where necessary, ask for aspects of the home to be altered to suit their needs.
Once they have looked at these houses, they can then decide whether or not they want to build a house with a similar design and whether the design will suit their needs.
Why are they a good investment?
The reason display homes are considered such an excellent and profitable investment is because of the lease back option, which guarantees rent, often at above market value.
Whilst the home may not bring in the same rental return once the lease back period is over, the short term benefits are enticing. The long-term returns are harder to predict and depend largely on the state of the economy at the time.
Further, because the tenant is the builder, and the house is only having walk-ins, the house stays in better shape. If regular tenants were to live in the house, especially larger families, the house is likely to get damaged. Thus, there is less chance that the tenants will damage the home, and if they do, it is easy for the builder to rectify it.
Purchase by an investor
Generally, a builder will construct a display home and an investor will then purchase the display home and lease this back to the builder to use in the display village. Builders typically look for areas where there is a big residential boom, and then begin construction. After construction has been completed, builders may approach investors, or vice versa, to purchase the property, with a "lease-back option."
The lease-back option is entered into by both the new owner of the property and the builders for a term lasting a 12 to 60 months. The builder then displays the home as a model to other potential buyers for the term stated in the lease agreement. Generally, this will last until the entire development has been completed and the home is no longer being used as a display home. This means that the investor is guaranteed rent for the entire term of the lease back option. This is a great incentive for investors looking to buy display homes.
Benefits for investors
High-end developers often fit out the home with all the latest fittings, at no additional cost to the investor.
Most builders will add in as many features as possible to make the home look as attractive and luxurious as possible, so that builders are able to demonstrate the possible added features that are available with the home.
This often means that the home is immaculately landscaped and includes upgraded appliances as well as timber decking, outdoor kitchens and the very best floors, furniture and fixtures available. Because of all these extras, the home is worth more. This means that when the investor decides to re-sell the property, they will get more!
Display homes are always found in the best locations of a development and are always surrounded by homes of similar quality and appeal, meaning the value of the home is more easily maintained and the property is usually very marketable and readily saleable.
These properties do not require an investment owner to handle maintenance problems. For example, with a traditional investment property, when a renter encounters a problem such as a faulty water heater, it becomes the responsibility of the property owner to immediately address and correct the issue for the tenant.
Tips
Investing in a display property is a great option for investors who want a rental guarantee on a property at above market value. The property will stay in better condition than a regular rental, and it usually comes with added extra features and fittings.
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