One of the first questions first-time investors will ask themselves and their real estate property professionals is what’s a better investment- a house or an apartment? Ultimately it depends on your investment needs, goals and strategies. You also want to factor in market trends and consult with property managers, sales agents and other specialists so you can know which investment is best suited for you.
Apartments or townhouses in a strata scheme will require you to pay ongoing quarterly strata fees. You may also need to pay one off special levies that will be used to maintain or upgrade the property’s common spaces. Both apartments and houses will require payment of council rates and water rates. The tenant may be charged for water usage if the property is individually metered and water efficient.
The pros of investing in an apartment
- An apartment usually sells at a lower price point because of the space and, more often than not, the absence of lands. This makes this property type a good entry point into investing in properties.
- Investors need not worry about building maintenance as this responsibility falls to the owners’ corporation as part of the strata scheme.
- Apartments in certain suburbs have higher rental yields than houses.
The pros of investing in a house
- The value of land increases in value over time.
- Putting in structural additions and making improvements to houses is much easier.
- There are tenants who prefer features which are typically only featured in houses, such as garages, backyards and extra space.
- Houses mostly have higher capital growth and have greater potential to be negatively geared.
- Houses have higher rental yields, depending on the location.