Buying an investment property – whether it’s your first or your fiftieth – is a big deal. It’s not just some out-on-a-whim decision you make to instantly get rich. The term investment means you’re in it for the long haul. Once you've made the decision to become a property investor, one of the first questions you'll probably ask is, what type of property should I invest in? An apartment? A townhouse? A house? While the answer may largely rely on the current rental market, your own personal finances, lifestyle, and property goals, we’re here to explain the pros and cons of each so you may get a clearer idea on what is the better investment for you and - hopefully! - you get to answer your own question.
If you’re clueless on where to start, you can begin with determining your non-negotiables. The space, location, and size of property are just some of the few factors you can think about. We listed out some examples of questions you can ask yourself to guide you in your decision-making process.
Once you have an idea of what your non-negotiables are or once you’ve sorted the major factors to consider, you’re now ready to look at your options!
An Apartment is a self-contained flat that is part of a bigger complex. Owning a unit means you are on a strata title. A strata title dictates that the unit belongs to you but several different owners share the common property. It also means you belong to a body corporate and you as a flat owner must comply with certain bylaws. You need to pay body corporate fees to cover the repair and maintenance of the common areas. The amount you pay will depend on the size of the lot you own, its age, its size, and its amenities.
A townhouse is a multi-level building designed to mimic a traditional house that is owned on a strata title which means you own the space but you share the land with other people. It’s a good alternative for families who want to own a house that are within their budget as townhouses offer the space and privacy of a house with an outside courtyard. However, townhouses also have body corporate that entails the same restrictions as that of apartments.
A house is a traditional stand-alone property wherein you purchase the land on an individual title. Houses are one of the most popular property types as it allows the most flexibility and privacy for owner-occupiers. Let’s look into the pros and cons.
Now that you’ve brushed upon some of the pros and cons of each type of property, you’ll know that the right choice or property investment is context specific. When it comes to maximising return on investment, there are two components to consider: rental yield and capital growth. Rental yield refers to the income received from the property and capital growth refers to the increase in value of property over time. Houses, when selected properly, have better growth patterns whereas apartments have better yields. When it comes to rental return, apartments are slightly better. If you’re looking to maximise rental income while minimising expenses, an apartment or a townhouse might be more ideal for you. But if you’re leaning towards capital gains, houses show much strong capital growth than apartments or townhouses. Some individuals may even consider rentvesting in order for them to purchase their dream home. Again, it all comes down to what your investment goals are.
To come up with the best decision when it comes to choosing the right type of property investment, you need to determine what your investment goals are and consider your current financial situation. It’s important to do your research, plan ahead and get advice from property experts who can guide you through your options.
As property investors and property managers, we want to help you get the most out of your investments. A9 Property provides first-time homebuyers and property investors knowledge on the world of real estate. Our weekly real estate blog discusses a variety of property-related topics, including property investment strategies, real estate industry trends, and current property market shifts to give you valuable insights and help you make informed decisions. We specialise in off the plan properties – a popular investment strategy in Brisbane and Australia. If you're looking to invest, Check out our carefully selected portfolio of off-market properties for sale or contact us for an obligation-free chat to discuss how you can succeed in the business and make the right property investments.