The Pros and Cons of Buying a Display Home

 

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Display homes are often attractive to new homeowners, and it isn’t hard to see why. Since they’re usually located in display villages, homeowners can visually see what their new property will look like once it’s built. Plus, display homes always come with premium fittings and fixtures.

 

Investors also tend to prefer display homes over the alternative because they can lease them back until the development sells out. This frees their capital for their next investment venture.

The Pros of Owning a Display Home

You can find plenty of display homes for sale in newly developed neighborhoods. Australia, the United States, the UK, and Canada are prime real estate markets, and homes tend to pop up and sell quickly. But is there any reason to buy a display home over a new or existing build?

 

There are a few good reasons to purchase a display home, including:

 

* Rental Return on Leaseback: Investors who buy display homes often get an immediate return on their investment if they decide to rent it out. Homeowners who want to live in that area immediately may rent from you, even if you charge more than average.

* Proper Construction: Builders are extra careful when building the display home and will go the extra step to ensure everything in the property is up to code.

* Premium Fixtures and Fittings: Display homes always show off the best fittings and fixtures money can buy. After buying a new home, you may not be able to purchase these items, but you’ll save money on your total investment if you get a display home.

* Quality Neighborhood: Display homes are typically around other display homes. Your neighborhood will look and feel high-quality, thanks to these beautiful homes.

* Great Investment: Besides a great leaseback rental return, a display home can also save you big time on management, fees, and claim depreciation. Display homes often sell for less than other builds in the area and always for less than their original value.

* Never Used: While yes, realtors and builders use them to show potential homeowners, they are still brand new because no one has lived in them on a day-to-day basis.

The Cons of Owning a Display Home

Although leaseback agreements are good, they are incredibly difficult to get. Lenders rarely approve these loans because of how much they favor the builder. In fact, most of the reasons why investors may avoid buying a display home have to do with lending in general.

 

Here’s why some homeowners should steer away from display homes:

 

* Technically Not “Brand” New: Many renters may not consider the home new, even if no one has lived in it. Technically, the renter is right. Depending on how many people have walked through the home, the fixtures and fittings may have some wear and tear.

* Deterioration and Exposure: With the door opening and closing all the time, the home is constantly exposed to the elements. If the builder allows visitors to wear shoes, this deterioration will happen faster. Some display homes are used for at least two years before they’re sold, so the plumbing and wiring may need some repair.

* Limited Designs and Styles: Display homes only show off one style or design, and it’s typically the least customizable option. While display homes are beautiful and well-stocked, they may not be to your taste, and you’re limited to what you can change.

* Less Than Ideal Location: Display home villages are typically more pleasing to the eyes than an in-progress neighborhood, but you can’t decide where you want your home to go. Once the display home is built, you’re stuck with that location. Since they’re near the estate entrance, you’ll likely be closer to main roads and/or highways.

 

Deciding on whether a display home is right for you depends on your circumstances. Most homeowners will benefit more from this purchase, but investors may need to act more cautiously. See if you qualify for a leaseback agreement first before taking the plunge.