Before investing, you’ll need to work out what type of property will suit you best.
It is a question that generates a lot of conversation and contention, so which one is better?
If you already have a particular area in mind for your investment property, it’s important to consider the demographics, as well as popular rental property types in the area. For example, if you are buying in an area that is popular with large families and where most of the rentals are 3 bedroom houses, looking at apartments could potentially make it harder for you to keep the property tenanted.
Houses have the element of land that a property investment apartment lacks, and houses usually experience greater capital growth as a result. To invest in houses comes with larger structures and gardens that require more ongoing maintenance compared to buying an apartment for investment and there is usually a greater perception of ‘space’ and separation from neighbours in a house compared to apartment living.
There is now a whole generation that have grown up in a more cosmopolitan environment of cafes and parks: living in apartments or townhouses with a smaller land size, so it wouldn’t have any bearing if they didn’t have a big back yard or lot.
Apartments have many clear attractive benefits: they can depreciate more quickly and thus are more likely to be in line for tax benefits. They have low maintenance and generally high capital returns.
The downside to apartments can be ending up in blocks with extremely high body corporate fees. Unlike houses, this is something you have no control over.
If your investment property is a long term financial strategy, houses are the more stable and profitable option for investing. Meanwhile, recent evidence suggests that, in some cases, apartments can yield a stronger return in shorter or medium time frames. This is an important factor to consider when making your decision; typically, investing in property is something done with the long-term gains in mind, however, whether this is the case for you is determined by your goals and perceptions.
The one thing unlikely to change is the continued need for housing