Existing properties
What are existing properties?
Existing properties are properties that are already on the market, as opposed to new-builds. These properties can be used for various purposes, whether for owner-occupation, as a rental property or as an investment property. Buying existing properties is particularly popular amongst investors who are looking for a stable cash flow and wish to benefit from existing tenancy agreements.
Advantages of existing properties
- Long-term tenancy agreements: Existing properties often come with existing tenancy agreements, which guarantee an immediate source of income.
- Attractive location: Many existing properties are situated in established neighbourhoods or regions with high demand.
- Lower risk: As existing properties have already stood the test of time, the risk of potential construction defects or delays – as is often the case with new-build properties – is lower.
Disadvantages of existing properties
- Need for renovation: It is often necessary to renovate or modernise existing properties, which can incur additional costs.
- Market risk: The value of existing properties can depend on market trends, which carries risks.
- Outdated infrastructure: In older existing properties, the infrastructure may be outdated, which can lead to additional investment.
How do you find the right existing properties?
When searching for existing properties, it is crucial to use the right sources of information. These include, amongst others, property portals, estate agents or specialised platforms for off-market properties. The key lies in comparing the listings and obtaining comprehensive information about the property in question, as well as its location.
Questions investors should ask themselves
- What is the current rental yield?
- Are there any planned developments nearby that could increase the property’s value?
- Is a comprehensive inspection of the building’s structure required?
Conclusion
Overall, existing properties present both opportunities and challenges for investors. Careful analysis and planning are essential to fully capitalise on the benefits of this type of property. With the right knowledge and a smart approach, existing properties can represent an excellent investment opportunity.
A clear example of the topic: existing properties
Imagine an investor called Mr Schmidt discovers an attractive existing property in a quiet residential area. The building is 30 years old and comprises ten residential units, all of which are let. Mr Schmidt decides to buy the property and quickly realises that the return on investment, thanks to the existing tenancy agreements, is over 6 per cent. After owning the property for a few months, he notices that some of the flats require modernisation and maintenance. Whilst Mr Schmidt invests in the necessary renovation work, he increases the rent and improves the quality of living. After two years, the return on investment has risen to 8 per cent thanks to the increased rental income. Mr Schmidt is pleased with his decision to invest in existing properties, as he has not only benefited from immediate income but has also created a valuable long-term investment.