House vs Apartment – Which Is Better for Capital Growth?

by | Aug 26, 2021 | How to Invest in Real Estate, Property Investment

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. 

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Turning $80k into $800k

Turning $80k into $800k

Welcome to the first episode of Property Investor Tales – Stories From The Front Yard!

Each week I get to speak to property investors from around Australia about their investing journeys. As the head of coaching at Positive Real Estate, I’ve been fortunate to connect with thousands of investors who have a story to tell. My hope is that from these incredible investors, your own investing journey is made that little bit easier. 

Abe Pasilidis is my guest today and he has an inspiring story to tell. I won’t give too much away but listen out for an $80k investment has turned into $800k, plus a hilarious story of property management gone wrong (when you DIY). 

Enjoy this conversation with Abe!

Once you’ve listened to this episode, I’d love it you hit the subscribe button  so you get notified every time a new episode drops. 

As you can guess I love hearing people’s property investor tales so if you’d like to share yours then please get in touch with me via email at  propertyinvestortales@positivementor.com.au You can watch all of these podcasts over on YouTube at Positive Mentor or at positivementor.com.au
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