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Not Escapin Xmas

Buying a display home?

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Not Escapin Xmas

A friend of mine is convinced that I should buy a display home as an investment. Apparently the building company pays you rent for the first two years and then you can do what you want with it (rent/live in it/sell).

 

Has anyone here ever bought one? Considered it? Whaddayareckon?

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hills mum bec

I know a few people who have looked into it but have had trouble getting insurance as the property is not lived in.

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Not Escapin Xmas

I know a few people who have looked into it but have had trouble getting insurance as the property is not lived in.

 

I hadn't thought of that. Hmmm.

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~LemonMyrtle~
Posted (edited)

Do they make you pay for all the extras they put in a display home? They’re usually too spec or close to top spec. If the extras were “free”, then I would consider it. Otherwise you risk being over capitalised.

Also, display homes often have fabulous wood flooring and gorgeous landscaping, etc, to entice the buyer. But they may not be the things you want in a rental. I know as a renter I was terrified of the polished hard wood floors we had in a rental once, so easy to damage.

 

Could be a good idea though. Guaranteed income when the estate is young and developing and a noisy mess, then it will be easier to rent or live in it once all the chaos has died down and the estate is more settled.

Edited by ~LemonMyrtle~
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xxyzed

My father had one. Dealing with the display home company was easy and the rent was reliably paid on time but that would be company dependent. Insurance was available but not offered by all insurers.

 

It is like any other investment. You need to consider the purchase price and whether it is market value and what you intend to do with it long term. If it is intended as an ongoing rental is it likely to be a desirable rental for the area and would the market rent make it a good long term investment.

 

My father intended to live in it when the display home company no longer wanted it. The display home company extended their lease term multiple times as it was still a popular display home. When they no longer needed it the home was sold as my father had died in the interim and the property effectively broke even on a cost less sale proceeds basis.

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The new me

I work in finance and have looked at a few of these over the years. Is it in a display village? Or just a house in an estate used as a display? If in a village and can't be lived in until the village is closed, getting finance can be hard unless you have other property to put up as security.

 

The rent in them is often very good and have little wear and tear. Look into if when you can sell the purchaser can still get first home buyers as they haven't been lived in, nt sure on this because it was still sold from the developer so unsure if available but maybe possible.

 

Negotiate purchase price hard, many builders get a lot of the stock for free, plaster, ovens etc from their suppliers so the cost to build a display is way less than a normally build.

 

Good luck

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Oriental lily

I am surprised anyone is looking in investing in ANY property at the moment .

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IamOzgirl

A family friend did it many moons ago.

 

My parents are risk adverse and they considered it very seriously.

 

I believe those friends live it that home currently (as per pp it was purchased as an investment with a primary home as the security, they then moved into it and sold the previous home) the rent is very generous I believe.

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SeaPrincess

It depends on your goals. I think defence housing is a better long term investment.

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Not Escapin Xmas

It depends on your goals. I think defence housing is a better long term investment.

 

Can I ask why? I did have a look at defence housing too.

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Luci

Do you know the area well? Have there been a lot of new housing developments, have they all been completed in a timely manner and sold well?

 

My inlaws live about 1.5 hours from Sydney in an area that has had a lot of housing developments over the years. At some points in time there has been an oversupply of new homes. I remember looking on realestate.com once and there were so many advertised for sale, all similar houses that had been for sale for a while.

 

There have also been some developments that have taken a very long time for the blocks of land to be sold, so a few people would buy and build and sit there surrounded by empty dusty blocks for a long time.

 

Anyway OP just something to think about, if there would be any risk in buying into a new area that isn't finished and doesn't have any history of sales and rental return. Are there any similar areas of new developments located nearby, and can you investigate the sales / rental returns for that development?

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SeaPrincess

Can I ask why? I did have a look at defence housing too.

Up to 12 years of guaranteed rent, even if vacant, and DHA covers most maintenance costs. Being near defence bases means there’s usually an ongoing demand for rentals even after the lease ends. Management fees seem to be a little higher than for private rentals. We looked at approaching DHA when we moved for DH’s work, but our house wasn’t suitable (we had a pool).

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Murderino

Many years ago I looked at buying a DHA home for all the reasons Sea Princess mentions. I also think they repaint and recarpet at ten years (or they used to).

 

My sisters leased her house in a military town to the state police department for the same reasons. She never has to worry about rent not being paid and they do most minor maintenance.

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SeaPrincess

I also think they repaint and recarpet at ten years (or they used to).

I think when we looked at it, they did it at 7 years and then at the end of the lease if it ran for 12 years. We didn’t have carpet in our Darwin house though.

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Not Escapin Xmas

Thanks all, really appreciate the info. So hard to decide what to do!

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Luci

Thanks all, really appreciate the info. So hard to decide what to do!

 

I agree it's a big decision which needs lots of research - ideally different types of properties and areas. I hadn't heard of the display home investment before and it is certainly an interesting idea but I would want to be convinced / understand why it was a better choice than a more conventional property investment.

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seayork2002

We looked into it (not in aus though) but my MIL & I investigated it and the quality was rubbish of the fixtures and fittings so dh and I did not look further into it

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