Comparing property types

Apartments vs. houses? New vs. existing? There are plenty of choices when it comes to the type of property you invest in. We investigate the options below.

Apartments vs. houses

Apartments

Can be more affordable and produce higher yields.

Easier to maintain though strata levies typically apply to cover the cost of maintenance and repairs to common areas.

Depreciation deductions can be greater for apartments as you may be able to claim a proportionate share of depreciation on commonly owned facilities such as lifts and security systems.

Houses

The land component of the property can enhance the potential for capital growth.

Houses generally cost more to maintain though they also offer greater scope to add value through renovations.

Houses are more likely to offer the 'scarcity' factor which can underpin long term capital gains and could mean fewer periods of vacancy.

Existing vs. new properties

Existing homes

You can see exactly what you are buying in terms of size, aspect, outlook, finish and the surrounding neighbourhood.

Established homes can show the result of years of wear and tear or worse, have significant defects. Be sure to arrange a professional pest and building inspection prior to purchase as this will highlight any defects or illegal building work that can be costly to repair.

Older homes will require more maintenance over time. This can impact your ongoing returns.

The property may have a known rent history or may even be sold with tenants in place.

Appliances or fixtures may be due for replacement or repairs.

Established homes can provide good opportunities to add value by renovating, subdivision, development or extensions.

The true market value of established homes can be determined based on more comparable sales.

New homes

Artist's impressions can paint an overly flattering picture of what you are really buying. Visit mock-up units or display homes and study floor plans closely giving special attention to the dimensions of rooms and outdoor areas.

A new property is likely to be clean, fresh and modern - and hopefully defect-free. This can make the property more appealing to tenants.
A new home can offer greater depreciation benefits than an older property and repair and maintenance costs should be lower.

You may be able to charge a premium rent for an 'as new' property though until the property's rent is tested in the market it is easier to over or underestimate the rent it will command.

Appliances are likely to be covered by manufacturers' warranties and builders' insurance.

There’s usually not much room to add value by renovating.

It is easier to over or underestimate the market value of new homes.

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