With so many options for investment properties – house and land packages, established properties, dual key, duplex, townhouses and more, how do you decide which property to invest in?
We’ve made a basic run-down of the different property options to help you decide which one will be right for you. If you’re also considering what suburb you should buy an investment property in, check out that article here.
Established vs New Properties
Established Properties
Buying an established property has its benefits. The building process and the stress that comes hand-in-hand can be avoided, and you are able to view the property beforehand to know exactly what you are purchasing If you take this route, it is essential to have a thorough building inspection prior to purchase, as you want to be completely informed about the condition of your potential new investment.
Established properties can also sometimes be negotiated to a cheaper price, meaning you save money on the initial purchase. You may also have the option to upgrade the property through renovations.
New Properties
Buying new, you have the option to buy a complete, turnkey house, or purchase a house and land package, where you are able to pick and choose the features you prefer. This allows for greater flexibility for the final product, which may increase the weekly rent.
One of the biggest drawcards for buying new properties is the lucrative tax benefits. Over time, everything in the house loses value slightly, and this loss is called depreciation. The value of depreciation can be claimed on your tax return, providing a very appealing return at the end of the financial year.
New properties also offer the benefit of appliances and fixtures being under warranty for several years, meaning if anything breaks down, you save money on fixing them. Even after the warranties run out, newer appliances are easier to find parts and repairers for.
How Do I Choose Between a New and Established Property?
New properties provide more flexibility, benefits and opportunities for cash back in your pocket, while buying an established property may be a simpler process. Be sure to speak with a qualified property investment advisor to be sure you receive the best advice.
At Prospa Property Advisory, we regularly help investors with new builds, as we have a diverse network of qualified builders and developers that we work alongside, which saves you, the investor, time and effort – plu, the tax benefits are too good to pass up.
What Type of Property Should I invest in?
Stand-Alone House
A stand-alone house is a building on its own land, with its own title (called a Torrens Title). This type of property is popular amongst couples and families with the time to maintain a small amount of property.
Benefits of buying a stand-alone house include a larger property size, yard space and increased privacy, which appeal to prospective tenants, as well as a higher resale value. Disadvantage, on the other hand, include a more expensive starting price point, and maintenance costs.
Townhouse
Townhouses are semi-detached dwellings that usually have their own backyard or courtyard area, but often share one or more walls with adjacent townhouses. They are usually on a strata, or shared title, which can mean additional fees and rules about parking or modifications.
Townhouses offer more of a “house” look and feel to a unit, and are cheaper than a house. However, townhouses usually offer no individuality, less privacy than a house, and the resale value is usually less profitable than with a house.
Unit
A unit, often used interchanged with apartment, is a smaller dwelling which shares a strata title with the adjoining properties. A block of units or apartments will belong to a body corporate, which will means fees to cover the maintenance of common areas.
Benefits of owning a unit include a much more affordable purchase price, less maintenance, and often additional amenities such as gyms, pools or lifts. However, units are usually quite small, have reduced flexibility regarding pets and noise levels, as well as parking issues.
Duplex
A duplex property is two properties on one plot of land, often a mirror image of each other and connected by the centre wall. They will sometimes share driveways, but are otherwise separate dwellings. They will usually each need their own title, and can be rented out to two separate tenants, meaning the investor receives 2 incomes from the one development.
Dual key
A dual-key property has two dwellings that usually share an entrance. One of the dwellings is usually smaller than the other, for example a 3-bedroom house with a 1-bedroom dwelling inside. This type of property can be leased to two separate tenants, though may also be popular with families looking for a separate living space for an older relative or adult child.
A dual-key property is one property that receives multiple incomes, and due to the need for only one strata title, there may be reduced fees.
How Do I Choose Which Type of Property To invest in?
Choosing the type of property comes down to what is going to be the most profitable in an area. Units, for example, can oversaturate a given market, which means that unless there is something outstanding about the property, it may not be a worthwhile investment. A stand-alone house may also not provide the greatest possible return in a given area. Sometimes, the best option may be a dual key or duplex, as they provide two incomes from one development – but there are more considerations to be made.
It is also worth considering the market – the demographics of the area, availability of quality schools, location and proximity to workplaces, and general aesthetics of an area can all affect the kind of people who want to live there. Consider the kind of household structure that is likely to want to live in your chosen area, and determine which property style would most suit their needs.
What If I’m Still Not Sure?
To find the best property for your situation, speak to your property investment advisor. They will be able to make recommendations based on the current market, as well as predictions for the future.
Prospa Property Advisory has helped numerous investors find the right property to reach their investment goals, and can help you, too! Give us a call on 1300660335 or email hello@prospaproperty.com.au to find out more.
