'Resale property' is generally a term used by agents who sell new or off-plan property. A resale property is typically complete, pre-owned, and is up for sale again. In some cases, a new property may be classed as a resale property if the owner is reassigned on the contract, however, this is not traditionally how the term is used.
There are several advantages to choosing to invest in a resale property. Primarily, the property is complete so there is almost no chance of running into complications during the purchase period. The exchange time can be a lot quicker and you don't have any worries about developer funding and reliability. The property also typically will have a rental history so you'll be able to look at how the property has performed previously in tenant occupancy. This will give you an idea if the property will be a good investment and whether you have the choice to raise or reduce rental fees to increase occupancy or rental income. You will be able to view the finished property and see where some areas may need some maintenance. Additionally, you may also able to get finance ready for when you buy the property and you won't be taking any risks on what your mortgage might be. You'll also be able to get an immediate income from the property as they are usually ready to be rented out or in some cases may already be tenanted.
However, there are some disadvantages to investing in a resale property. There is no payment plan option so you must pay for everything upfront, unlike an off-plan property where you may be able to spread your payments out over a period of time. You do not get to enjoy the benefits of capital growth through the build of the property as it is usually completed. You have little choice in layout, design and furnishings whereas if you are investing in an off-plan development, you have more choice on view and apartment size and in some cases, you can have the apartment tailored to your requirements. Most new-build apartments come with a 10-year build warranty however you do not get to fully benefit from this in resale property, and in some cases, rental guarantees may become void once the property has been sold. Any furnishings or appliances in the property may have warranties, but like the property itself, you do not get to benefit from the full length of these warranties and may have additional maintenance costs.
These are the main differences between a resale property and new-build development as well as the primary advantages and disadvantages of choosing to invest in a resale property.
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Read the video transcript below:
Hi and welcome to Ask Johnsy. Latest question is what is a resale property? Well, a resale property is any property which isn’t new and has been pre-owned before. So, you could get a new property which is now going to be reassigned on the contract, that also be known as a resale property but not in the traditional sense of the word. Resale property is a term that’s used mainly by agents who sell new property.
So, what are the differences? What are the disadvantages and advantages of buying a resale property versus buying a new property? Well, a resale property is complete, it has a history, you know exactly what you’re getting, you can go and view it, you can see the good things and the bad things in the apartment and maybe plan to do something about those that aren’t to your taste. The property will have a rental history generally speaking so if you’re looking to rent the apartment out, you can see what it’s been rented for in the past and whether you think there’s any scope for increasing the rent if it’s been fully occupied, or maybe reducing the rent to get a more complete occupancy.
Also, you can get finance, you can have finance in place for the property ready for when you buy it so you’re not taking any risks on what your mortgage might be. And finally, you could get an immediate income from a resale property typically because it’s there ready to be rented out when you take it over. In some cases, it might already be rented so you’d get the rent from when you complete on that property.
So, let’s have a look at some of the disadvantages. There’s no payment plan so you’re having to pay all of the money straight away, you can’t sort of spread your payments out over a period of time. Typically, you’ll complete between 1 month and 3 months. And also, you don’t get the benefit of capital growth through the build of the property. So, when you’re buying off-plan you can put down a smaller deposit and get huge capital growth in some cases without having to put that much money in. Also, there’s no choice of design, layout, view, when you’re buying in a new development you might say ‘well I want a south facing balcony, I want an open plan kitchen’, and you can generally have that choice and you can maybe in some cases have the apartment tailored to what your requirements are.
Also, some of the warranties may have expired so you naturally get a 10-year build warranty on a new property, if buying it 5 years in then you’re 5 years into your warranty and that counts for your appliances as well that come normally with an apartment or a property some of those warranties may have run out. So, you may have maintenance costs in order to get the apartment rented again. Guarantees for a new build may not be transferable so if you’re buying a student property for example on a resale basis, although it may have a 5 year rental guarantee and you’re only 3 years into it, sometimes that isn’t transferable.
And that’s it, they’re the differences between a resale property and a new-build property and thank you for watching Ask Johnsy.
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