A resale property is essentially a property which is being “flipped” by someone who has bought off-plan. The original buyer gets the benefit of capital appreciation. The new buyer gets a property with high appeal to tenants. In fact, it may already be tenanted.
The advantages of resale property
Most of the advantages of resale property hinge on convenience. It’s the original buyer who puts up their money during the construction phase. This means that it’s the original buyer who takes the risk of construction delays (or of the property not being finished, although this is very rare in the UK).
If you need a mortgage, then you’re likely to find it easier to get one for a completed property than for an off-plan property. As the property is new, it should be easy to get it signed off by surveyors and conveyancers. It should also be built to the highest standards of energy efficiency.
New properties tend to be attractive to tenants for much the same reason as they are attractive to buyers (both residential and investment). The fact that they’re new means that everything works to current standards. You’re not going to have to deal with the issues you can get with older properties.
The downsides of resale property
Most of the downsides of resale property hinge on the fact that there’s generally a price to pay for convenience. If you buy off-plan, then you can expect a discount on the fair market value. You can also expect to be able to customize the unit to some extent, for example, to choose worksurfaces.
If you buy existing housing stock, you can hunt for bargains. For example, you can look for properties which are only, realistically, available to cash buyers, e.g. short-lease properties. You might then be able to address these issues so that you can benefit from capital appreciation.
You might not be able to customize existing property in the same way as off-plan property. Then again, however, you might not need to. If you do, then you can negotiate a discount which compensates you for the cost of the upgrade and, ideally, leaves you with a little profit on top.
Is resale property for you?
Whether or not resale property is for you will probably depend largely on your attitude to investing. If you really want to “have your cake and eat it”, in other words, have capital appreciation and yield, then probably not. Resale properties tend to be sold at fair market value and you’re unlikely to be able to add value by upgrading them.
If your priority is yield, then resale property may be for you. Again, it depends on your priorities. If you really want to maximize your yield, then you probably want to steer clear of the resale market. Instead, you’ll want to go bargain-hunting. The less you pay for a property, the easier it is to get a good yield on it.
If, however, you want a decent yield with minimal effort, then resale property could be exactly what you need. It’s easy to let, easy to maintain and will have a lot of in-built future-proofing. For example, most new-build properties will easily meet minimum energy-efficiency standards.
Pure Investor are specialists in UK property investment and Resale Investments with a wide range of investment opportunities including property investments in Manchester, Liverpool, Sheffield and Leeds.
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