Blog

December 15, 2017

Should you Invest in a Unit or a House?

Many property investors are torn between investing in a unit/apartment or a house. Both options have benefits and drawbacks. Here’s a quick breakdown for you

Units|
Units are often a better option, or the only option, for first time investors because of their affordability. The median house price on the Sunshine Coast is currently $555,000 while for units it is $390,000.  Units can be easier to let because they tend to appeal to a wider demographic and are more affordable for tenants. Another advantage of investing in a unit/apartment is that they require less hands on maintenance although you do have to pay body corporate fees. 

A Unit may be cheaper to buy than a free-standing home but the fees of the body corporate can increase over time especially if you have amenities in the building such as a lift or swimming pool, another disadvantage is that you don't get any land with a unit/apartment . It is not hard for developers to increase the supply of units & apartments in your area but they cannot increase the supply of land unless you are buying in outer lying areas. If new unit/apartment developments flood the market where you have bought, it could depress the value of your property. Another disadvantage of an apartment is that you can't make any major improvements beyond refurbishing the interior. 

Houses
The big advantage of a house is the fact that it comes with land. Land tends to appreciate over time while physical buildings depreciate unless they have heritage value. This means that freestanding homes on a good block of land are a great option for investors looking for long-term growth. The exception is homes in new estates where you could potentially find land being released faster than demand and flooding the market. Buying a house can also mean you have the freedom to do meaningful renovations that can increase the value of the property.

Both units and houses have the potential to be profitable investments. Whichever option you choose, it’s important to do your research about the market including a professional rental appraisal and get the right property managers to maximise the returns from your investment.