Should You Invest In A House Or An Apartment?
For first-time property investors, one of the big questions to ask is what type of property should I invest in? When deciding whether to invest in a house or an apartment, you need to first identify your investment needs and longterm goals.
You can start by looking at market trends. Consult with your property manager, sales agent as well as other specialists on vacancy rates, demand and supply, rent prices and other factors so you can figure out what property is most likely to meet your investment goals.
If you’re considering apartments or townhouses, it’s important to remember that these types of property may be in a strata scheme, which will require you to pay ongoing quarterly strata fees. You may also need to pay one-off special levies, which will be used for maintenance as well as the upgrading of the property’s common spaces.
Certainly, each property type comes with its own set of benefits:
The pros of investing in an apartment
- An apartment usually sells at a lower price point because of the reduced space and, more often than not, the absence of land. As a consequence, this property type can be a good option for investors looking to get into the market for the first time.
- Apartments in certain suburbs have higher rental yields than houses.
- Apartments are key to inner-city living and this type of lifestyle is trending due to the increase of young professionals, choosing to live closer to the city, and the downsizing of baby boomers.
- Walkability is a valuable factor for many prospective tenants and apartments are usually located within or close to key dining and shopping areas.
- For investors who want to increase their portfolio, a well-positioned and established apartment in a boutique complex is an affordable option.
The pros of investing in a house
- The value of land increases over time. If you own a substantial plot of land in a sought after area, you will likely see significant capital growth.
- Putting in structural additions and making improvements to houses is much easier. You have more options whether you want to develop a house or build a new one.
- There are tenants who prefer features which are typically only present in houses, such as garages, backyards and extra space.
- Generally, houses mostly have higher capital growth and have greater potential to be negatively geared.
- Compared to an apartment, you wield greater control over a house in terms of development and maintenance.
There is no straight answer to whether you should invest in a house or an apartment. A “one-size-fits-all” strategy will not apply to this decision but should take into consideration your investment needs and goals.