Houses vs Units: Which Is the Right Investment for You?
As a new property investor, you may find yourself wondering which type of property is the right choice for you: a house or an apartment unit.
Just like any investment, both options have pros and cons, and it can be tricky to decide — especially with the Brisbane real estate market changing rapidly. Luckily, if you’re unsure which direction to take your investment strategy, this guide is here to help.
Below, you’ll learn the benefits and drawbacks of investing in houses vs units.
Investing in a House: Pros and Cons
If you’re leaning toward buying a house, you know you’re about to make a significant financial investment. Before pulling the trigger, consider these pros and cons to ensure you make the best choice.
Pro: Long-Term Capital Growth
Generally, a house will have more long-term capital growth (increase in value over time). The reason for this more significant growth is that the land on which the house is built tends to appreciate the longer you own it (as long as you buy property in a desirable location).
Con: Higher Price
A house will almost always cost more than an apartment unit (unless the house requires a lot of work). For example, the median price of a home in Brisbane is over $698,000. Conversely, the median price of an apartment unit is over $489,000.
Pro: More Renovation Options
When you own a house, you have quite a bit of flexibility regarding renovating and upgrading it. If you want to add an extension, revamp the kitchen, or knock down a wall, you can do so.
Con: Lower Rental Yield
If you plan to rent out a house after purchasing it, you’ll likely find it has a lower rental yield. Although the capital growth for homes is higher, you might have a more challenging time generating a ton of rental income and maintaining positive cash flow.
Pro: More Reliable Rental Returns
Although the rental yield is lower, the reliability of your rental returns tends to be more significant.
One reason is that rental houses appeal more to families with kids or pets. These people typically want to stick around long-term, meaning you can likely rely on them paying rent consistently for many years.
Con: Higher Maintenance Costs
Because houses are larger, they generally come with higher maintenance costs. As a homeowner, you’re responsible for handling all repairs to the interior and exterior yourself, which can get expensive.
Investing in a Unit: Pros and Cons
Are you thinking about investing in an apartment unit instead of a house? If so, consider these pros and cons before moving forward with this purchase.
Pro: Lower Cost
As you saw from the numbers above, an apartment unit typically comes with a lower upfront cost than a house. A unit may be a better fit if you don’t have a lot of cash on hand but still want to dive into the property investment world.
Con: Lower Land Value
One of the main benefits of buying a house is that the land appreciates in value over time. You don’t get this same perk when you purchase an apartment unit, meaning you might not see as much of a return if/when you sell.
Pro: Lower Maintenance Costs
Because apartment units are smaller, the maintenance costs tend to be lower. Maintenance costs are also shared across all unit owners in a building (this form of ownership is known as a strata title).
Con: High Body Corp Fees
A body corporate (or body corp) is a legal entity that manages the common property in an apartment complex— such as garages, foyers, pools, etc. Body corporate fees can get pretty high, especially in more modern, luxury buildings.
Pro: Easier Management
If you plan to rent out your apartment unit, you’ll likely find it easier to manage than a house. There’s no yard, for example, so you don’t have to worry about paying for landscaping costs. A smaller unit space also tends to come with reduced management responsibilities.
Con: Fewer Renovation Options
Because you share building space with other unit owners when you purchase an apartment, you have fewer options for renovating and upgrading. You typically have to get approval from the body corporate before making any changes, which can be frustrating and time-consuming.
Bonus Tips for All Property Investors
Some rules apply across the board when considering a house or unit for your next investment property. Here are a few bonus tips that will help you choose the right property, regardless of type or size:
Consider Your Goals
Start by thinking about what you want to accomplish by investing in property.
A unit might be a better choice if you want to earn a lot of money by renting the property out. If you’re interested in living in the property and then selling it for a profit in the future, you’d be better off with a house.
Monitor Trends
Keep an eye on the current real estate market and trends before making a final decision. Take note of what’s happening in the market so you can pick an option to help you accomplish your goals.
Choose the Right Location
Picking the correct location is crucial if you want to achieve your property investment goals. If you buy a house or unit in an area nobody wants to live, you might struggle to find renters or sell it for a profit later.
Need Help Finding Your Next Investment Property?
At the end of the day, it’s up to you whether you invest in a house or unit. Both options have pros and cons, and your final decision should align with your long-term goals.
Once you’ve made your final decision, it’s time for the fun part: Shopping for a new property!
Here at Hot Property Buyers Agency, our team of property professionals are here to make every aspect of your property transaction easier than ever. From finding and inspecting the properties, to negotiating the price and even managing value adding renovations, our job is to make your life easier. Contact us today to learn more about our services or arrange a meeting with one of our experts.
Find Your Perfect Investment Property in Brisbane Today, With Hot Property Buyers Agency.
If you're looking to find your next investment property, get in touch with our team today. We can help you find the property, secure it for a great price, and even manage and plan value-adding renovations to maximise your returns.