What type of property should I invest in?

Houses vs townhouses vs apartments

So, you have your principal place of residence sorted and you’re now looking at purchasing an investment property – how exciting! The next challenge is choosing what type of property to invest in with houses, townhouses and apartments all on offer.

The most important thing to remember is don’t just do what everyone else is doing and don’t just buy what you would want to live in; do your research and set a strategy to reach your goals through property investment and aligning with your specific circumstances.

Let’s explore some quick pros and cons around these different property types:

HOUSE
When purchasing a house, you are also purchasing the land on an individual title. While houses often have more room and privacy for the tenant, it’s also a bigger space to maintain and often more expensive to buy in the good locations.

TOWNHOUSE
A more condensed version of a house, when purchasing a townhouse, you’re buying a multi-storey building that you own, but you share the land. While a townhouse is often cheaper than a house, and has more space than a unit, there are often stairs which won’t be suitable for some demographics.

APARTMENT
When purchasing an apartment, you are on a strata title, which means you own the unit, but the common property is shared with other owners. Units are often cheaper, have good and extra amenities but you do need to be mindful of being in close proximity to neighbours.

In both townhouses and apartments there is often a body corporate involved. Some people see this as a negative but in a well-managed complex it is actually a major benefit, for example the cost of maintaining the building is shared and there is a committee to organise the works.

How to choose:
You can’t choose a good property investment based solely on the property type. Property is a tool within a strategy to create a return on investment. Multiple factors must be taken into consideration before pulling out the chequebook, including the type of built form, that will ensure the best rental return and capital growth that combine to make your return on investment over time. Here are some of the key questions to consider:

● What type of property is in demand?
Research what type of built form is most in demand but undersupplied. For example, on Queensland’s Sunshine Coast the majority of supply is larger 3-4 bedroom homes but 60% of households are only single or 2 person households. Overall demand levels are high, but too much of the wrong product is being built. Instead, investors would be wise to build where the highest demand sits which is smaller housing product.

● Where is the property located?
The last thing you want to do is purchase an investment property in an area you can’t attract good tenants! Look for a location where the population is growing, and then find a suburb that has important amenities such as schools, shops and good public transport.

● What is my budget?
It’s important to find the right property in the right region but it also needs to be the right price and fit your current circumstances and goals. Consider the price of the property now, how quickly the market is moving and how much it’s likely to increase in value, also consider the rent you can achieve. Run all the numbers on income and expenses as well as tax advantages to work out if it’s a good deal.

Finding the right type of property at the right time in the right region and the right price is the constant pursuit of the avid investor. While residential property is a forgiving asset class, it’s important to remember few people achieve real success and, in most cases, could have achieved more.

Our Investor Property team is here to help you develop strategies to achieve your objectives and work with your current circumstances to see you build wealth through a property investment journey. We provide our advice and research at no cost to you and delight in sharing our insight to help you achieve.

Call Investor Property today to speak with a property coach. Ph 13 31 32.

For more information about why the Sunshine Coast is the top residential market to invest in, you can download our FREE 2021 Sunshine Coast Property Market Update e-book The Sunshine Coast; The Future.