Whether you’re a first home buyer or a savvy investor, what’s the best option when it comes to comparing house vs unit – and what are the factors to weigh up?
Once you’ve managed to successfully purchase your first home, there usually comes a point where most Aussies start looking at other avenues to increase their income. Suddenly, property becomes less of a necessary evil, and transforms into a logical means to generate wealth – or at least, that’s the aim of the game anyway.
When we refer to investment properties, the term is usually used to describe houses, apartments or townhouses that investors buy, and in turn rent out to another person to live in. There are many reasons as to why the average Australian would want to start investing – for some, it’s about building a financial safety net and enjoying a comfortable retirement, while for others it’s an attractive way to lower their tax obligations.
However, the current real estate marketplace in Australia has both first home buyers and investors considering all of their options for purchasing property – and somewhat unsurprisingly, the age old conundrum of house vs unit is back in the spotlight.
House vs Unit: Who Wins?
When it comes to determining whether purchasing a house trumps a unit – or vice versa – as of yet, nobody has been able to come up with a clear cut answer. After all, if there was one, the other would in theory cease to exist, or have more built.
Unfortunately, there is no “one size fits all” approach if you’re determining whether buying a house or a unit is the better fit for you, as the answer usually boils down to a number of variables. Apart from the actual dwelling in question, market conditions also play a key role in a property’s profitability, but so does how you intend on using it.
As a buyer, other things to consider when comparing a house vs unit include the following:
Initial Cost And Affordability – For both first home buyers and investors alike, units, apartments and flats are usually much cheaper than houses, which means a lower sale price and cheaper mortgage repayments. However, units don’t usually see the same capital growth that houses do, as the land attached to the latter also lifts in value over the years too.
Ongoing Expenses And Fees – Council rates are usually higher on a house, and owners are required to pay land taxes on an ongoing basis. With a unit or apartment, you will have to account for body corporate and strata fees quarterly for the life of the investment or the tenure of your property ownership, including any special levies that may be raised along the way.
Required Maintenance – Unless you have a property manager, all of the maintenance issues are on you if you own a house, which can include anything and everything from mowing lawns to cleaning gutters. In comparison, one of the better perks of owning a unit or apartment is that these responsibilities often fall under the umbrella of the body corporate.
Your Long Term Goals – As a first home buyer, purchasing a unit or apartment can be your ticket out of the rental pool. However, they may not be the best fit if you like your gardening or intend on raising a family in one. As an investor, houses usually offer for negative gearing opportunities, while units can generate higher rental yields if you pick the right property.
Ultimately, there are countless pros and cons for and against almost any type of dwelling. What constitutes as the “right” choice for you will vary, depending on your overall financial position, risk profile and long term approach to your investment portfolio.
Take The Stress Out Of Selling Property
A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
