Understanding Display Home Leasebacks

Investing in a Display Home can appeal to investors providing high yield and capital growth opportunities with careful selection of the right property.

 

Also known as a ‘leaseback’, the term is defined as an arrangement where the owner of a just completed, newly built home immediately leases the home to the builder to use as a Display Home for an agreed period of time.

Generally a leaseback agreement period for a Display Home is flexible ranging from 1 to 5 years.

When entering a leaseback agreement, the rent can be very attractive. The return is typically much higher compared to your typical property rental return.  Investors will also benefit from no management fees and maintenance expenses throughout the duration of the agreement.

Typically a Display Home will showcase the builder’s quality, new ideas, premium fixtures and be well maintained inside and out with manicured gardens. Therefore investors can rest assured their investment property will be cared for and well maintained throughout the duration of the lease.

Selecting the Right Property

When considering a Display Home as a property investment, consider the following:

Will you be seeking a new tenant once the leaseback period has ceased?  If yes, ensure the property you are investing in is situated amongst other Display Homes and within a growing area to maintain your desired rental return with your new tenant.

If your plans are to occupy the home at the end of the leaseback, you’ll enjoy the short-term benefits of a high yield and the luxury of a brand new home.

The development of new infrastructure is one of the most effective creators of capital growth in real estate.  To maximise your property’s potential, seek a growth area where there is further new infrastructure planned.

The Geelong/Surf Coast region itself is one of Australia’s fastest growth areas with many new developments and suburbs like Armstrong Creek expected to provide housing for up to 65,000 people according to the City of Greater Geelong.

The focus on a sustainable community with physical and social infrastructure is a draw card to many new home buyers.