6 Reasons why First Home buyers should buy older units. 

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Older units are very often cheaper than buying a modern unit in a high-rise building. While investors and downsizers demand new buildings with all the mod cons, this drives the prices in these buildings up. As a first home buyer, you can get a better deal and stretch your budget further with an older building.  

They are Cheaper.

Strata and body corporate costs are significantly cheaper than in high rises. Typically, older unit blocks with less than 20 units have much lower body corporate costs due to less moving parts. For a smaller established unit block strata fees can be as low as 0.3% per annum. In new high-rise apartments with facilities, these costs can raise as high as 1.5% per annum. Lifts, gym facilities, pools, shared barbeque and picnic areas all add on to the strata fees. Additionally, by virtue of being a smaller and established building, there tends to be less risk of major structural issues as you would expect that these would have been fixed over the life cycle of the building. That is not to say that old buildings do not have any problems, but normally if there is an issue outstanding, this can be easily determined by asking for the body corporate history and obtaining a building inspection prior to settlement. 

More room for activities!

The rooms are typically larger in older buildings. If you are after a bedroom that fits a double bed, a bedside table, and still has room for a clothes basket, then an older apartment is for you. We have all been inside a modern high-rise apartment and been shocked at how close the walls are to each other. It is common in high rise apartments for a double bed to take up 90% of the floor space in a bedroom, meaning that you have to crawl over your bed to get to the wardrobe. There is a currently a resurgence of developers building apartments with a larger footprint and better lay out for families. These options however are being heavily marketed to older Australians and potential downsizers with a large wallet to help them. This means you will have to pay higher premiums to buy in one of these buildings. 

No media reports about the buildings Cracking.

New builds are not always problem free. People will argue for both sides of this one, saying that new builds are covered by warranties and insurance and therefore the best option to buy. In fact, it is common advice given to investors chasing high rental yields that new is best. The reasoning for this is that appliances and the main build should be covered under warranty. This is contingent on the builders and developers of the building in question. A recent Deakin University report showed that building defects are on the rise in new builds across Australia. As we know from the cladding crisis in 2017 there is a risk that smaller developers may simply go bankrupt or out of business if problems arise. Unfortunately, once a company is no longer in existence there is no legal recourse for fixing the problems that they caused.  

Capital growth is stronger.

Smaller unit blocks tend to hold value over time much better than high rise units. New units in Australia typically decrease in sale value by 10-20% as soon as they are built, this is due to first homeowner grants, home builder grants and the high number of taxes passed on by the developers. With an established unit in a smaller block, you are buying a much higher ownership percentage and more voting rights than an apartment in a high-rise building. This means that if the block is to be sold in the future to a developer or if the land value increases you gain a higher percentage of the growth than if you owned in a high rise. 

Character and Style.

Older units can often have unique character and STORAGE. Apartment blocks built prior to 1980 tend to have limited power outlets and a lack of mod cons that some tenants desire. This should NOT put you off as a buyer! Offsetting the bad lighting is larger living rooms, ceiling roses, real architraves and often brick or concrete walls that actually keep the sound out. This style of units also tends to have an external lockable 1 car garage and sometimes also a laundry room. The ability to store equipment and belongings in a garage is a luxury that is not available for those living in a high-rise apartment. These features are also not desirable to investors as they are not able to get as high rental yields as a property with modern features. 

Personalisation.

Older units are easier to renovate/ modernize. If you are willing to pitch in and spend some time, it can be cheaper to renovate an existing property than to buy something that has had work done by someone else. Minor works such as repainting, replacing the old carpet or flooring and updating window coverings and light fittings can dramatically change the look and feel of an apartment. These are all items that a relatively cheap and easy for novices to tackle and have a major impact on modernizing a property and boosting the value as well.  

General advice disclaimer
The information provided on this website is a brief overview and is general in nature. It does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.

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