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25 March 2014 comments Matthew Curtis

Should you invest in buying units or homes?


Units or houses? Why not both? There are theories that say investing in units is better and others that say that houses are better. The answer to what is better for an individual comes down to personal motivation for purchasing. There are other considerations such as length of investment as the exterior of a complex of units does not need the upkeep that a typical house requires.

A house will typically offer an investor many more options then a unit will. For example, adding a deck or bedroom or perhaps enclosing the carport and making it a garage will increase both the capital value and rent yield. For the most part this is an option with houses, but for units not so much.

Houses come on sections also – which means there is the added advantage of subdivides, extensions, rezoning. These areas of investment simply are not an option when it comes to the typical unit investment. Sure, they come with “higher risk”, or is it that you simply need to do a little more research before you purchase?

Investing in a property where capital outlay is required requires more time and energy then say a stock standard unit investment that does not require any work. The other consideration of course is demand. Typically a rental unit returns a lower yield then that of a house and the demand from tenants for a unit is greater than for a house.

Investment unit’s capital value can be held back when a similar unit in the same block gets on sold cheaply by a highly motivated vendor. Likewise, there tends to be more turnover in a block then of the 1 dwelling of course and if higher returns are achieved in the group, then the on flow affect to others is very positive.

In establishing if a unit or a house is a better investment, the answer is not straight forward given the diverse range of considerations. An experienced property manager can always help you in deciding which way to go, given their broad range of experience and expertise in establishing returns and potential capital increase to an investment.

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