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A lot of property investors favour one type of property – either apartments or houses. While there are pros and cons to both, one of the advantages of houses is the investment you’re making not only in the house, but also in the land.
Land value increases in value over time, and investment in a piece of land also gives you options to renovate, subdivide and develop, all of which lead to greater increase in value. But, with a land investment, also comes time, money and skills.
So, what’s the best path to take?
HOUSE AND LAND INVESTMENT Advantages
Opportunity for higher value increase – this depends on market conditions Strategic improvements e.g. renovations, subdivision, development Depreciation of the structure of houses
Generally lower rental income Higher maintenance costs APARTMENT Advantages
Generally higher rental yield – good for your pocket Easier to hold – a strata manager is responsible for the upkeep of the building More properties at the cheaper end of the budget
Not owning the land means the value won’t go up as much or as quickly Strata fees Less renovation opportunities Some markets are oversupplied Banks can have stricter lending policies
HOW DO YOU CHOOSE THE RIGHT INVESTMENT PROPERTY? While all types of property have good and not-so-good aspects, there are some key decision-making factors you should take note of. Ask yourself…
Can I afford this property? – Know your limits. 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 good for you? – Quality location is one of the most important parts of a real estate investment. It should be a deciding factor in choosing the type 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 an up-and-coming area.
Is there enough chance of income? – If you’re keen to maximise your profit from every investment, one of the biggest advantages to houses and land investment is the potential to expand. Buying land means you can create multiple income streams via subdividing, developing or rebuilding. This tactic is only and option with house and land investment.
TALK TO AN EXPERT Before you sign any contracts, talk to our team of experts to discuss the right investment strategy for you.