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In some places, new areas grows better and quicker than old area..then slowly old area will start to pick up .. Everal examples in Sydney or even Brisbane. Everyone said not to buy in new estates in Brisbane or even Sydney .Look at now..within 5-10 years it grows in values 300%. Sometimes It dosen't matter how much land getting released ..if the demand is high. Land releases takes time . Also if new estates are done properly, people would like to live in new estate rather than old less maintained neighborhood
PK is absolutely spot on here. As a general rule, I find a home around 10 years old, in a new estate, is good buying because these people are exhausted from having their home values go no where for 10 years. If you can line that metric up with a market just about to swing up, you’ve got the baseline for a buying strategy
So dramatic. It’s never New vs Old. It’s Deal 1 is better than Deal 2 for your circumstances, your situation and your strategy. Deal 1 can be new or old. Great things can be built new like - dual occupancies, rooming, townhomes etc. that help the housing crisis, economy and create jobs.
Property investing is great generally but the point is you've missed out on more profits than what you've made if you bought in the same location but an older house. It's not the worst thing in the world, obviously. It's a comparison.
Your depreciation explanation was rather limited. In the current environment and 50% CGT discount, you should depreciate capital. When you depreciate capital yearly, it actually reduces your cost base so when you eventually sell you will have more capital gain. However, with 50% CGT it actually means you are still ahead than if you didn't depreciate at all. Buy new house/land for 800K of which house cost 400K to build. Hold for 10 years and then sell for 1500K. Without depreciation, your initial cost base around 800K, your capital gain is 700K, with 50% CGT discount you have 350K taxable. If depreciate for 10yr, you get 100K offset against income over 10yr, your base cost is 700K, your capital gain is 800K and with 50% CGT you have 400K taxable. However, as long as your tax rate is less than 50% (which everyone's is no matter how much income you earn), you will always be ahead. However, this IS NOT a reason to purchase new property as you will only end up a small amount ahead. BUT, in every case you will always end up ahead depreciating while we have a 50% CGT discount and even $1000 in your pocket instead of the taxman's is better. Whether you use that benefit wisely and not squander it will determine whether you should depreciate. As well understanding depreciation and what you can expect after paying capital gains is critical for planning ahead.
@@chollypaderanga307 depending on the market conditions, you can make big $$$ if you find a decent H&L packages. However, you have to be very careful these days, as many builders are merely collecting deposits with no intention of starting and finishing your build.
Hi PK, love your data driven content. There are bad eggs in the real estate industry in general, however house and land packages are not necessarily bad. Areas like The Ponds and Kellyville in Western Sydney have more than doubled in the last 10 years and these were sold as house and land packages back then (2013-2014). So - like your argument for buying established properties where most houses in the area are owner occupiers and not investors, buying house and land in the same location can be beneficial. Especially when you save $10-20k in stamp duty which can be used for your next purchase. In saying this, not ALL house and land packages are good, just like not all established properties are good. Big developers are usually smarter than most people and will only develop in areas where government is spending money on infrastructure. Yes, they can charge more and artificially increase prices but I'd like to think that most established houses since the 1990s were built this way...
I always had this contention that most of the property clubs, property gurus and buyers agents are just resellers and agents of developers and builders. They always push you towards apartment units or new developments and never consider old established properties though they claim to consider all properties
That’s what I did in 2016 and now in 2024 I have 4 investment properties. My nice you get one it’s a lot easier to build capacity to get the next one 👍
7:25 A Accountant arguments i have heard is that yes you pay back depreciation in future like in your example. the accountant arguments is you benefit in today dollars and you have to pay it back in future inflated dollar that worth less. Just need to account for it when selling.
I'd like to know about that too - the first time I've heard that .... but heard and suckered in by all the other things you were warning me to look out for 😩
Someone has actually talked about this above, but basically all depreciation that you've claimed in your tax returns need to be included to reduce your cost base when selling the property. So if you purchased the property for $1m and depreciation claimed over 10 years of $100k, your cost base when you sell will be $900k, which means you'll have a higher capital gains and hence higher CGT. Don't forget to take into account that capital gains get discounted by 50% when held for more than 1 year. So you'll still come out ahead but PK is right, depreciation should not be a strategy. It's a side benefit.
If u not good with your hands or what has to be done by qualified people or don’t have vision of what a room or house can look after renovations don’t try it
Oof.. I took it hook, bait and sinker. That said I'm looking at $200k increase in value on approach to PIC. I wonder how it will fare long term. Glad I started my learning journey, I was definitely lazy going in.
@@waTATsiwaIt really depends on the deal at that point in time. I purchased a new HL package in a growth corridor area based on my affordability, and its value has almost doubled in just about 2 years. Maybe it was luck! That said, I agree with PK-be cautious if buyer’s agents are pushing HL. It’s always a good idea to contact the developers directly and beyond what’s being offered by agents.
Sorry I still don’t understand. My parents went from Guildford Wa to bushmead (neighboring suburb). They went from an old house to a ‘new house’ built in 2021. They wanted to downsize. Would this be a big no no long term?
Some good points but hardly 💯 accurate. I bought in pimpama back 2016 brand new off plan, never had a single drama or gone more than a week without tenants. It’s doubled in price and provides a reasonable rental return. It’s more about the right deal and if you’re wanting to make gains you need to do your homework and research or trust someone to do it for you. I’ve tried both ways and can’t complain. Sure there’s been bumps or interesting times with interest rates and such but property is a long game unless you are good with your hands and can renovate places. I am not, so I stick to my lane.
So many comments from new property sprukers defending the new build crowd. When you see defence like this in the comments, you know PK has something fundamentally correct.
PK, if everyone thinks like you, then who’s going to buy new IPs? There’s not going to be many houses built and the rental crisis will only exacerbate. I’m all for building new but perhaps investors of such properties must be given more incentives to make it worthwhile.
new houses mainly government planning to develop such suburbs........ government panned hospitals, shopping centres, schools...... So such new properties are good....😂😂
The wealth people are making has come off the back of Aussies...It is not right that foreigners take the wealth that they did not create and are not rightly entitled to.
@emp731 what's the context here? Depends which foreigner you are talking about, people who came here and paying their taxes and making money should not be bothered here, but foreigners who came on boats are the real problem
Read your comments. Most people that watch your show are investors including myself… I have 4 properties the best ones is the off the plan new property. Remember this is a long term investment.
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In some places, new areas grows better and quicker than old area..then slowly old area will start to pick up .. Everal examples in Sydney or even Brisbane. Everyone said not to buy in new estates in Brisbane or even Sydney .Look at now..within 5-10 years it grows in values 300%. Sometimes It dosen't matter how much land getting released ..if the demand is high. Land releases takes time . Also if new estates are done properly, people would like to live in new estate rather than old less maintained neighborhood
kellyville was dirt cheap when they started selling house and land packages several years back from $600k, now pushing $2M
PK is absolutely spot on here.
As a general rule, I find a home around 10 years old, in a new estate, is good buying because these people are exhausted from having their home values go no where for 10 years. If you can line that metric up with a market just about to swing up, you’ve got the baseline for a buying strategy
So dramatic. It’s never New vs Old.
It’s Deal 1 is better than Deal 2 for your circumstances, your situation and your strategy.
Deal 1 can be new or old.
Great things can be built new like - dual occupancies, rooming, townhomes etc. that help the housing crisis, economy and create jobs.
I'm newbie here. I bought my HL two years ago in WA. The price have gone up 250k we
Property investing is great generally but the point is you've missed out on more profits than what you've made if you bought in the same location but an older house. It's not the worst thing in the world, obviously. It's a comparison.
Hi PK, thank you so much for this video and sharing all information for us. ❤
Your depreciation explanation was rather limited. In the current environment and 50% CGT discount, you should depreciate capital. When you depreciate capital yearly, it actually reduces your cost base so when you eventually sell you will have more capital gain. However, with 50% CGT it actually means you are still ahead than if you didn't depreciate at all. Buy new house/land for 800K of which house cost 400K to build. Hold for 10 years and then sell for 1500K. Without depreciation, your initial cost base around 800K, your capital gain is 700K, with 50% CGT discount you have 350K taxable. If depreciate for 10yr, you get 100K offset against income over 10yr, your base cost is 700K, your capital gain is 800K and with 50% CGT you have 400K taxable. However, as long as your tax rate is less than 50% (which everyone's is no matter how much income you earn), you will always be ahead. However, this IS NOT a reason to purchase new property as you will only end up a small amount ahead. BUT, in every case you will always end up ahead depreciating while we have a 50% CGT discount and even $1000 in your pocket instead of the taxman's is better. Whether you use that benefit wisely and not squander it will determine whether you should depreciate. As well understanding depreciation and what you can expect after paying capital gains is critical for planning ahead.
Came here to say the same thing but you did a much better job of explaining it.
Very true. That's how I did. He is very authentic and honest. The most trusted source information. Respect and application you as always. ❤❤
Pk, what you mentioned about a Financial Advisor selling new HL packages happened to us. And you’re 100% right
@@chollypaderanga307 did you buy ?
@@chollypaderanga307 depending on the market conditions, you can make big $$$ if you find a decent H&L packages. However, you have to be very careful these days, as many builders are merely collecting deposits with no intention of starting and finishing your build.
Hi PK, love your data driven content.
There are bad eggs in the real estate industry in general, however house and land packages are not necessarily bad.
Areas like The Ponds and Kellyville in Western Sydney have more than doubled in the last 10 years and these were sold as house and land packages back then (2013-2014). So - like your argument for buying established properties where most houses in the area are owner occupiers and not investors, buying house and land in the same location can be beneficial. Especially when you save $10-20k in stamp duty which can be used for your next purchase. In saying this, not ALL house and land packages are good, just like not all established properties are good.
Big developers are usually smarter than most people and will only develop in areas where government is spending money on infrastructure. Yes, they can charge more and artificially increase prices but I'd like to think that most established houses since the 1990s were built this way...
Excellent video.
Had the same experience trying to deal with buyers agent sometime back
Great video PK. Such gold in your words.
I always had this contention that most of the property clubs, property gurus and buyers agents are just resellers and agents of developers and builders. They always push you towards apartment units or new developments and never consider old established properties though they claim to consider all properties
Another excellent video - very honest and useful information he got every time . Thanks PK
Is there a scenario where you would buy new to take advantage of first home owners grant? Like build a duplex with it or something
That’s what I did in 2016 and now in 2024 I have 4 investment properties. My nice you get one it’s a lot easier to build capacity to get the next one 👍
7:25 A Accountant arguments i have heard is that yes you pay back depreciation in future like in your example. the accountant arguments is you benefit in today dollars and you have to pay it back in future inflated dollar that worth less. Just need to account for it when selling.
Great advice all around. Can you please explain “you payback depreciation when you sell” is a CGT thing?
@@tonybrisbane6396 would like to understand this too
I'd like to know about that too - the first time I've heard that .... but heard and suckered in by all the other things you were warning me to look out for 😩
Someone has actually talked about this above, but basically all depreciation that you've claimed in your tax returns need to be included to reduce your cost base when selling the property. So if you purchased the property for $1m and depreciation claimed over 10 years of $100k, your cost base when you sell will be $900k, which means you'll have a higher capital gains and hence higher CGT. Don't forget to take into account that capital gains get discounted by 50% when held for more than 1 year. So you'll still come out ahead but PK is right, depreciation should not be a strategy. It's a side benefit.
very useful, thanks
Excellent discussion, 100% on the money
Would a house and land package perform well in a hot selling area in Perth like scarborough? Thanks in advance
Pk always great content keep it up thanks
I totally agree aim for rarity aim for value add
100% on the money here PK
I love your content mate thankyou
If u not good with your hands or what has to be done by qualified people or don’t have vision of what a room or house can look after renovations don’t try it
Please with a 500k budget with single income tell me ppor location for adelaide which suburb? Really confused
Oof.. I took it hook, bait and sinker. That said I'm looking at $200k increase in value on approach to PIC. I wonder how it will fare long term. Glad I started my learning journey, I was definitely lazy going in.
doesn't have to be so extreme as I had bought HL packages and they had doubled in value in about 10 years time.
That’s actually pretty poor given many houses have doubled just last 3 years. Huge opportunity cost.
@@waTATsiwaIt really depends on the deal at that point in time. I purchased a new HL package in a growth corridor area based on my affordability, and its value has almost doubled in just about 2 years. Maybe it was luck! That said, I agree with PK-be cautious if buyer’s agents are pushing HL. It’s always a good idea to contact the developers directly and beyond what’s being offered by agents.
Sorry I still don’t understand. My parents went from Guildford Wa to bushmead (neighboring suburb). They went from an old house to a ‘new house’ built in 2021.
They wanted to downsize. Would this be a big no no long term?
Some good points but hardly 💯 accurate. I bought in pimpama back 2016 brand new off plan, never had a single drama or gone more than a week without tenants. It’s doubled in price and provides a reasonable rental return. It’s more about the right deal and if you’re wanting to make gains you need to do your homework and research or trust someone to do it for you. I’ve tried both ways and can’t complain. Sure there’s been bumps or interesting times with interest rates and such but property is a long game unless you are good with your hands and can renovate places. I am not, so I stick to my lane.
PK, how old are you referring to? 10-15 years old?
If you can consistently keep annual maintenance to $1,500 in a house 10-30 years old, I salute you !
@@kwridgway I have for over 10 years, ex capex. New homes see a hockey stick maintenance profile
Hey PK, what do you think of Binvested?
He is coping him
@@yuliaschannel6288 what?
@yuliaschannel6288 Binvested are a buyers agent. With PK's course, you don't need a buyers agent.
Avoid
@@yuliaschannel6288they buy units. We don’t.
So many comments from new property sprukers defending the new build crowd. When you see defence like this in the comments, you know PK has something fundamentally correct.
PK, if everyone thinks like you, then who’s going to buy new IPs? There’s not going to be many houses built and the rental crisis will only exacerbate.
I’m all for building new but perhaps investors of such properties must be given more incentives to make it worthwhile.
new houses mainly government planning to develop such suburbs........
government panned hospitals, shopping centres, schools......
So such new properties are good....😂😂
The wealth people are making has come off the back of Aussies...It is not right that foreigners take the wealth that they did not create and are not rightly entitled to.
@emp731 what's the context here? Depends which foreigner you are talking about, people who came here and paying their taxes and making money should not be bothered here, but foreigners who came on boats are the real problem
To much hate on buyers agents we get it
New property in an established area? - knock down and rebuild
Land and house package won't go up a lot in the future
Read your comments. Most people that watch your show are investors including myself… I have 4 properties the best ones is the off the plan new property. Remember this is a long term investment.
i agree with you? Off the plan are not too bad. you just need to end up with a good one.
I agree with you