If you are looking for a home to buy now and rent out for a few years before moving in yourself, buying a display home might be an ideal option to consider.
Doing away with the hassle of finding a tenant, display homes are often offered for sale under an agreement which sees the builder you buy the property from becoming the tenant.
This is commonly called a leaseback, according to Nicheliving Projects Director Peter Blackall.
“It is where one can buy a home and lease it back to the builder for an agreed period to be operated as a display home,” he said.
“Generally the term ranges from one to three years.
“It also offers a fixed investor return with virtually nil vacancy risk, and the tenant will pay the council rates and outgoings.”
One of the major benefits of buying a display home is all the hard-work is done for you – the garden is manicured and well cared for, the home comes fitted with the latest finishes and smart home technology, and there is less hassle overall.
“Though there are well over 30 projects in the north-west corridor of Perth alone, there is a general movement away from large-scale display villages these days, hence the opportunity to buy a display home is becoming more limited,” Mr Blackall said.
“Often those display homes located within infill projects are preferred, as they provide the best of both worlds, for example, a high-quality home closer to amenity.
“These are more unique, come up less frequently and are generally located within smaller boutique projects.”
Mr Blackall said buying a display home was best suited to investors with larger deposits and the capacity to keep gearing low.
He also said it was worth looking into the builder to make sure they were, and there was, little risk of them defaulting on a lease agreement.
Another recommendation from Mr Blackall was checking yields against the market rates and checking the lease agreements, as rental payments can sometimes be monthly or annual.
“The sales process is the same as with any new home, with a lease agreement added to the contract, which needs to be considered if the buyer is financing the home,” he said.
“It is recommended to make oneself known to the builders, as they keep a database of interested leads to ensure you get the jump on competing investors in this proven investment channel.
“Nicheliving currently has a number of premium display homes for sale within infill areas on a leaseback arrangement.
“We focus on locations within close proximity to schools, retail centres and public transport that result in great opportunities for owner-occupiers and investors alike.”