Next time you step inside a display home, take time to stop and think about the fact that you may be standing in front of your best investment yet.
There are several things you probably don’t know about show homes, starting with the fact that they offer a range of extremely profitable advantages, starting with the guaranteed rent for a set period to the reliable tenants with a vested interest of keeping your property in excellent shape.
Whether it’s a modest show home or a two-storey show home in Perth, display homes represent a viable opportunity for investors. In fact, they are regarded as a prized addition to any investment portfolio.
Purchasing and Building
If you’ve only ever played part in the property landscape through conventional means, the method of purchasing a display home may take you back a little.
Typically, the developer buys land in a high-profile area. Here, they put together a display village, which they market directly to buyers. Builders will look for a display home site with high-action frequency – quality development is where the action is.
The Lease Back Option
The developer can sell the home and then lease it back from the owner during the building process or when the property is finished. This is the lease-back option, which allows the builder to use the house as a display home.
In return, they pay you as the owner and a fixed rent that is generally higher than the regular rent out of a property to a tenant in the normal rental market.
A Prized Investment
The only catch is that display homes are a larger investment compared to a regular home in the conventional property rental market.
Because of this, most endeavour to maintain the property as a display home for a minimum period of 18-24 months. Some even write extension options in their lease-back agreements for another 12-18 months.
The developer will only be ready to move on to their next project when the estate has been fully developed and the display home is no longer required. It’s not guaranteed how long it takes, but when it comes to guarantees, you can rest assured you’ll always have a very good tenant with a display home.