03Dec

Property: House v Unit

This is another popular question we get when investors are looking at buying property. Just like in our other article ‘Old versus New Property’ there is no clear cut answer. What is really important is to identify the purpose of the property and how it fits into your personal portfolio. Here are a few simple questions;

Is it for investment purposes or lifestyle? There is a huge difference between looking for properties that are for your own home versus an investment.

What is your available cash flow?

What is your tax situation?

Do you want to maintain the property?

If you answer these questions, you can then look at the pros and cons of units and houses and it will help you make your property purchase decision. Listed below are some of the pros and cons of units and houses.

Units

Pros – Easy to manage/maintain, higher depreciation, typically higher rental yields, less security issues (apart from ground floor apartments)

Cons – Potentially higher ongoing costs (strata), lower average capital growth than houses

House

Pros – Typically higher capital growth, higher land component, ability to renovate more

Cons – Lower depreciation, maintenance issues, lower yields

As an example, for an investor who is looking for a simple property solution that doesn’t cost them much to hold and helps them reduce their tax we would look at a new unit as a solution because it meets their criteria. The same property wouldn’t suit an investor who potentially wants to retire in the property.

It is important to remember, that it is not just capital growth and rental yields which determines the best property solution for you. If you would like to chat about the best option for you feel free to hit the chat button.

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