Pros and Cons of Buying a Display Home as an Investment

A display home is a builder’s chance to show off their work to potential buyers - it’s usually the first house built in a developing area and will be used to showcase materials, finishes, layout, and style to the community.

Display homes offer quality, style, and convenience - essentially, they offer everything you want out of a property, especially if it’s an investment property. Beyond the inclusions, clean finishes, and new appliances, display homes also can offer advantages for investors. So, what are the pros and cons of buying a display home as an investment? 

Can display homes be used as an investment property? 

The short answer is yes — once purchased, a display home can be used just like any other owned property, whether as a primary residence or as an investment property.

The main difference lies in how display homes are used for investment. Conventionally, investment properties generate income by leasing them out to a tenant, or through capital growth as property values increase over time. With display homes, however, the value of the property as an investment can work differently.

How do display homes work as an investment?

Display homes are owned by the builder, who is usually contracted to have the home displayed in the display village for a set period of time to promote the new developments in the area. Most builders are happy to offer the display home for purchase as it frees up the capital investment that was put into it originally.

When display homes are purchased, the property is typically leased back to the builder for continued use as a showcase. This means that the new owners of the display home will be offering a fixed rental income for a set period - with the amount (usually) higher than what a regular residential tenant would pay.

For investors, this means a high return during the period it is leased back to the builder, without having to find tenants or deal with maintenance or property management issues.

Pros of display homes as investments

High and stable ROI

With display homes, buyers can enjoy a reliable stream of (high) rental income as the property is still required by the builder during the showcase period. This arrangement offers guaranteed returns that are difficult to nail down with a regular tenancy.

Well-maintained property

It is in the best interests of the builder to keep the display home in pristine condition in order to showcase the quality of their work. For this reason, builders will often pay for all the maintenance or repair work required (such as professional cleaning) to keep the display house in great condition, which also adds up to major cost savings for investment owners.

Desirable location

Display homes are built on carefully selected plots of prime land, in a premium location of the future development area. This means that there is significant potential for future capital growth of the display home as the neighbourhood around it becomes more developed.

Professional design

Display homes are built with expert craftsmanship and attention to detail, from layout to top-of-the-line features and inclusions that may not be found in other more basic models of homes that the builder offers. Not only does this increase appeal, but it also drives up property value, providing the potential to attract buyers at a higher price if you choose to sell in the future.

Cons of display homes as investments 

Limited lease period

The leaseback arrangement with the builder is typically for a fixed term, usually only 1-3 years. Once this period ends, the display home will be vacant and will need to be occupied by new residential tenants.

High loan requirements

Financing a display home purchase for investment can be quite challenging — lenders may impose a higher deposit or stricter loan terms compared to the purchase of standard investment properties, which can lead to more upfront capital required from buyers.

At Cougar Homes, we have display homes in Cairns across Smithfield Village and Cherrybrook that feature some of our most exquisite and premium designs for new homes. To learn more about our local builds, get in touch with our team today.