House vs Apartment – Which Is Better for Capital Growth?
Many property investors favour one type of property – either apartments or houses. While there are pros and cons to both, which we will discuss here, one of the often forgotten advantages of houses is the investment you’re making not only in the bricks, but also in the land.
Land value in itself increases over time, and investment in a piece of land also provides opportunity to renovate, subdivide and develop, all of which lead to greater capital growth.
But, with land investment, also comes time, money and skills.
So, what’s the best path to go down?
First, let’s weigh up the clear pros and cons of different property types for different property investors.
HOUSE AND LAND INVESTMENT
Advantages
- Opportunity for higher capital growth – depending on market conditions
- Strategic improvements e.g. renovations, subdivision, development
- Depreciation of the structure of houses
Disadvantages
- Generally lower rental yield
- Higher maintenance costs
APARTMENT
Advantages
- Generally higher rental yield – good for cashflow
- Easier to hold – a strata manager is responsible for the upkeep of the building
- More affordable options available
Disadvantages
- Lack of land value impedes capital growth
- Strata fees
- Limited renovation opportunities
- Some markets are oversupplied
- Banks can have stricter lending policies
HOW DO INVESTORS CHOOSE THE RIGHT INVESTMENT PROPERTY?
While all types of property have good and not-so-good aspects, there are some key decision-making factors that are the same for any property type.
Ask yourself…
Can I afford this property? – Know your numbers. If you can’t afford the deposit, the loan repayments, the taxes you’ll pay, the agent’s fees and any renovations you’ll need to do to ensure good rental income, don’t buy it. Speak to a lender or mortgage broker who can help you work out what you can afford.
Is the location right? – Quality location is one of the golden rules of real estate investment and might be a deciding factor in choosing the style of property you buy. If you know the location is right, but can’t afford to buy a house, an apartment might still allow you to own an investment property in a flourishing area.
Is there enough growth opportunity? – If you’re keen to maximise capital growth from every investment, one of the huge advantages to houses and land investment is the potential to expand. Investing in land means you can create multiple income streams via subdividing, developing or rebuilding. This tactic is only really possible with house and land investment.
BUILDING A DIVERSE PORTFOLIO
Great investors capitalise on a range of opportunities across the real estate spectrum. Before you sign the dotted line, talk to our team of experts to establish the right investment strategy for you.
We have a number of free property investing masterclass webinars to help get you started.
Book your spot now and find out what you need to know about the current market landscape and how you can make it work for the ultimate wealth creation opportunities in 2021 and beyond.
Click here to like us on Facebook and see more updates like this.
Hey there, do you enjoy the Positive Real Estate Blog? If you did, why don’t you book into a Property Information Night in your area and get more information from our team. You can do so here.
Leadership & Property Investing
It’s time we had a conversation about leadership – real estate investor style. Some people are unwilling to run their own financial affairs. If you are listening to this show, that means you are a property investor or preparing to be. This means you have to be the leader of your financial life. This episode is dedicated to unpacking your primary question, what’s stopping you from being more self-led, and an unwelcome visit to the podcast from my hearth and home neighbour.
Oh yes – and it’s dedicated to three awesome listeners of the podcast! Alison, Sue and Peter – this one’s for you! No Lake Weirdo for you!
Banks vs. Non-Banks, Are They Safe?
Here we go again, APRA is back with banks and non-banks and are they really safe? who and what are they? Come along and find out why Jason thinks it will be a better choice going forward for investors. Let’s Wealth Coffee Chat!
House Prices To Drop 12%!
Why do we think that CBA is predicting this will happen? Come along and join Jason to take a deeper look into this. Let’s Wealth Coffee Chat!
From Mortgage Disaster to Financial Freedom with Helen & Ian Morse
This is a story of courage and bravery. Of how naivety can lead to expensive mistakes (see margin loans being called on) to having the grit and determination to see it through to the end. Helen and Ian Morse have ridden this very rollercoaster, and whilst there’s a lot of heartache in the story, it has a very happy ending, with the couple’s financial independence allowing them to travel the world for over 12 months – with more bucket list dreams to come.
Once you’ve listened to this episode, I’d love it if you hit the subscribe button so you get notified every time a new episode drops.
Your Burning Questions Answered (Part 2)
I failed you on the previous episode! I had so many questions from you that I didn’t answer on the previous ep! The last show was a failure because I didn’t get to nearly as many questions as I wanted. So we are doing a second Q+A show. Listen to hear the answers to the most pressing questions in the real estate space and my expert opinion.
Difference Between Thoughts and Facts
It is so important for us as investors to be able to tell the difference between thoughts and facts. So, let’s Wealth Coffee Chat!
Here Comes the Media Circus Again!
Are prices really going to drop 10-12%? Let’s see what all the fuss is about. Let’s Wealth Coffee Chat!
How Property Investors Can Reduce Tax Down To Zero!
Every smart property investor knows that to create and maintain a portfolio, we need to have good cash flow. One of the ways we can support this is by using depreciation and tax. But, just like equity, depreciation only works for us if we know how to access and then leverage it.
NEWS FLASH: Clearance Rates Dropping!
These news headlines are just getting better and better. Today we talk about the most recent headline which is are Clearance rates dropping and how will this affect us as property investors? Let’s Wealth Coffee Chat!
Retired by 50 with Sharen Carruthers
Sharen Carruthers had a goal to invest in real estate and be retired by 50. She achieved her life’s dream with two weeks to spare and then did as many retired people do. She travelled the world to all the places she wanted to. She gave her time to family and some business interests. And then … she got bored.
This exciting, inspiring and enlightening conversation with Sharen demonstrates that sometimes our goals and dreams are there to open up a new possibility of what’s next. It’s not always the achievement of a goal that is the magic. It’s the opportunity that the achievement. And Sharen shares all of that on this episode of Property Investor Tales. Enjoy!