Which property is right for me?
There are many properties and strategies or combination of strategies which can be used when investing in property. Understanding the tax, growth, income, demand and supply differences between houses, units, townhouses and multistory developments is the difference between a successful property portfolio, and a poor performing portfolio.
Houses as an Investment property
These tend to rent for a lower rental return than units or townshouses but they tend to grow at a slightly faster rate due to their larger land component as a proportion of overall value. An investment in a house also has the potential to be used or resold in future as a larger development project on its own or in combination with adjacent properties either under current planning regulations or under future changes to local and state government planning regulations.
Apartments or Units as investment property
Apartments/Units tend to provide a higher rental return (as a percentage of their value) compared to houses but generally tend to grow at slower rates of capital growth as a result. They are often easier to maintain since most maintenance is undertaken by a strata manager. They are also tend to generally have a little more building tax depreciation benefits compared to average houses due to the larger building costs as a proportion of the land size/value. On the downside, future development potential is limited due to the need to get strata approval (other owners in the block) for any major renovation, addition or improvement.
The gross higher rental return compared to houses is reduced by the strata costs involved in maintaining and repairing common property and grounds (including lifts, pools, gym, common walk ways, driveways, landscaping and cleaning of lobby/stairways and parking areas). A careful analysis should always be undertaken prior to any purchase to ensure the provision of such facilities are valued by renters in the area and actually result in a sufficient return on the cost of providing these.
Duplexes/Townhouses/terraces as an investment property
These have some of the attributes of houses and some of units, how much they resemble houses or units depends on the specifics of each property and whether they are Torrens title or whether they are strata title.
For a complimentary consultation to determine which property type is most appropriate for your investment needs, contact our office today for a complimentary consultation on Ph 1300 505 565.