House, Townhouse, or Apartment—Know the Difference in Growth
Jun 2, 2016 - By Nicholas Scott Property Investments

Whether a house, townhouse, or apartment is a better investment has been a long-standing debate. There’s definitely a difference in opinion among landlords.

If we’re not debating about when the best time to consider investing is, we’re debating about what we should invest in.

Some investors believe that the value of a property is in the value of the land, therefore, they firmly believe that a house is the best investment. Others believe that individual characteristics such as location, amenities, size, and number of bedrooms play a larger role and are more important than the type of dwelling.

What is important to know is not what type of dwelling is the best, but rather what type of property will deliver a greater return on investment over the long-run due to capital growth.

Historically, houses have experienced greater growth than prices for units, however, it’s important to stay up-to-date on recent trends and also keep in mind your investment strategy, financial position, and risk profile. Times change and preferences are definitely changing.

Let’s delve a little deeper, so you have a better picture.

Investing in an Apartment, House, or Townhouse

An apartment is a low-maintenance investment and typically has a lower initial cost than a home or townhouse. Tenants also find these units attractive, especially in trendy urban suburbs. Investors  quite often achieve a high rate of return in terms of rental income for apartments in many areas.

One thing to keep in mind when investing in an apartment complex is the strata fees. Avoid investing in complexes where the fees are too high, but remember that much of that strata fee is accounting for costs you would pay out-of-pocket for things, such as maintenance, should you investment in a house.

In a capital city, finding a house at an affordable price can be tricky whereas finding an apartment at an affordable rate can be much easier.

Today, it’s more and more common to find people who prefer an apartment or townhouse in a lifestyle suburb where they have access to a great location over a home that is further outside of an epicentre.

The argument still remains, however, that owning land does increase capital growth potential and offer the opportunity for future flexibility around the use of the land. Whatever option you choose, there are on-point justifications and income and growth opportunities to consider.

As an investor, you’ll need to be prudent and be sure that no matter what dwelling type you invest in, you secure the right property in inner and middle suburbs where there is huge demand, but somewhat limited supply.

If you have questions about purchasing an investment property or would like to speak to a qualified real estate professional, contact us.

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