House, Land or Apartment – Tops Tips on Which Property Investment Type to Choose for You

As a qualified property valuer, buyers agent and active property investor myself I have valued, bought, renovated and property managed many homes and units for property investors all around Australia.One question I am constantly asked is:Should I buy a house or a unit? Which property investment will outperform for my property portfolio?So I thought I would put together a pros and cons on home investment vs unit / apartment investment.Buying property such as units, villas, townhouses, apartments as a property investment:Pros

Commonly cheaper than houses in the same investment area
Generally higher yield (due to greater demand for smaller low maintenance households and a smaller initial financial layout)
Typically lower maintenance requirements and costs
Most unit blocks have tight security – ie a secure unit block or private access.
Many modern blocks have great facilities such as gyms, pools, gardens, etc.
Often located within close proximity to inner city locations and in-demand amenities, service and lifestyle type areas.

Strata fees can be costly.
It can be more difficult to gain significant capital gains through renovation as renovation can be limited especially to the outside of the unit of which you have limited control.
Property Development of a unit is near impossible unlike a house of which you have full control.
It may be difficult to refinance to draw equity and reinvest, especially if there is building problems, even if its not your unit which is directly unaffected.
Some apartment blocks have gyms, pools etc and strata levies can be substantial. If apartment blocks have facilities like a pool or elevators which could be a personal ‘pro’, these often are financial ‘con’s’ as these facilities require more ongoing maintenance, therefore higher costs and generally lower capital growth.
Often located in high density areas
Less privacy
Buying houses/homes as a property investmentPros

Larger land content which is great for capital growth
More lifestyle space (backyards, living rooms etc.)
Creative control over the entire property, and therefore renovation and development is easier due to more control of the investment asset and usually more capital gains on renovation or development costs spent compared to apartments.
Usually in lower density areas
More privacy

Traditionally lower rental yields due to larger land component
Not commonly found (or not affordable) within close proximity to inner ring of CBDs which is where the higher capital growth is.
More maintenance required (which can mean higher ongoing costs and therefore less cash flow from that particular property investment)
Easy to overcapitalise on add value projects, so need to be an experienced propery investor who understands the detail and process of property development and renovation before undertaking it. This can be quite costly in time as well as money.
Having read the above pro’s and con’s – you are now probably forming more a solid opinion of what you should do next. It is important to realise though this depends on what is your overall life and investment plan, not just the next transaction, as at Capital 360 we map investors property portfolio strategy moving forward 10-20 years, and this could be a combination of units and houses depending on what part of the life cycle the investor is at.

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