The current economic client has seen investors seeking some more alterative options with display home leasebacks proving popular in key regional locations.
A leaseback agreement is where is a builder sells a display home to an investor and simultaneously enters into an agreement to rent that home back for a fixed period of time.
According to Integrity New Homes (INH) display home leasebacks are popular because:
· The homes are located in prime locations in the latest estates and sub-divisions and are usually part of display villages so the neighbouring homes are also of a similar high standard;
· Because the displays are the builder’s “shopfront” they are usually landscaped and finished to the highest industry standards, often including a large number of upgraded items such as ducted air conditioning, integrated home entertainment systems and home management systems;
· While the home is on display there is nobody living in the house hence there less wear and tear, particularly on the appliances and kitchen areas than if the tenant was living in the home;
· The homes are regularly maintained to ensure the builder is presenting the property in the best possible way to attract clients;
· Landscaping becomes very well established during the period the home is on display; and
· Depending on an individual’s financial situation there can negative gearing and tax benefits in a display home investment.
INH Director, Glenn Leet, said: “We enter all our display homes in a range of housing awards with a significant percentage of these homes taking out major awards.
“When the owner comes to sell the home there is certainly greater appeal in being able to offer an award winning design for sale.
“Rents are usually calculated as a percentage of the purchase price and there are even financial institutions which specialise in this area of investment,” Mr Leet said.
INH has display home leasebacks available from time-to-time at a range of locations in New South Wales and Queensland.