When it comes to property investment, one of the first decisions investors face is the type of property to invest in. With various options available, each with its own set of advantages and considerations, choosing the right investment strategy can be a daunting task.
Let’s explore the pros and cons of investing in apartments, new house & land, and established properties, helping you navigate your investment journey with confidence.
Apartments – Modern Living and Convenience
Pros:
- Affordability: Apartments generally come with a more accessible price point than houses, making them particularly appealing to first-time investors or those with a tighter budget.
- Low maintenance: With communal areas and facilities managed by a strata company, apartments can be a low-maintenance investment option. Further, the smaller size of apartments also means less upkeep and cleaning and with no garden, you won’t need to worry about weeding or lawn mowing.
- Location: Apartments are often strategically located in urban centres or near amenities, offering residents and tenants easy access to shopping centres, public transport, and employment opportunities.
- Access to onsite amenities: Many apartment complexes offer shared amenities such as pools, gyms, saunas, rooftops or entertainment rooms, which can be attractive features for tenants.
Cons:
- Strata fees: When you buy into a strata complex (such as an apartment), you are required to make regular contributions to the complex to support the repair and maintenance of the common property that belongs to the strata company. Investors need to factor in these fees, which can impact the overall return on investment. See here for more information on strata fees.
- Limited customisation: Unlike houses or vacant land, apartments offer limited scope for customisation, both in terms of layout and design.
- Small apartments generally appeal to a smaller rental market, and depending on the location are often suited to international students and interstate workers. This can lead to shorter rental periods and higher leasing costs.
Houses & Land – The Freedom of Choice
Pros:
- Customisation: Building a new house from scratch provides the opportunity to tailor the property to your exact specifications, from the floor plan to the finishes and fixtures.
- Land appreciation: Land is a finite resource, and its value generally appreciates over time. Investing in land can offer potential for significant capital growth in the long run and especially in today’s market, whilst building, land is likely to appreciate.
- Potential for dual occupancy: With the right zoning and permits, land can be subdivided or developed to accommodate multiple dwellings, increasing rental yield and ROI.
- Potential savings on Stamp Duty: Instead of paying stamp duty on the entire purchase price of an existing property, house and land packages only require stamp duty on the land component prior to construction. This approach can lead to notable savings, particularly in areas with high property values.
- Modern designs and amenities: House and land packages typically embrace contemporary architectural styles. These homes are optimised for space, flooded with natural light, and tailored for contemporary lifestyles. They often come equipped with cutting-edge kitchen appliances, sleek bathroom fixtures, and modern amenities that meet current homeowner expectations.
- Sustainable features: Many house and land packages prioritise energy-efficient elements, including double-glazed windows, solar panels, and top-notch insulation. These sustainable choices not only contribute to a healthier planet but also offer homeowners the potential for reduced utility costs over time. As the demand for eco-friendly living options rises, homes with sustainable features are likely to maintain their value and attractiveness in the market for years to come.
Cons:
- Initial cost: Building a new house can be a substantial financial commitment, requiring a significant upfront investment for land purchase, construction costs, and associated fees.
- Time: The process of building a new house, from securing land to project completion, can be lengthy and may require ongoing involvement and supervision. Additionally, building projects can often encounter unforeseen challenges, such as weather disruptions, unanticipated site complexities, or fluctuations in material availability. These obstacles can induce stress and potentially impact both the project schedule and budget.
Established Properties – Time-Tested Investments
Pros:
- Immediate occupancy: Established properties are ready for occupancy, allowing investors to start generating rental income immediately without the wait associated with new builds.
- Historical data: With established properties, investors can access a wealth of historical rental and sales data, providing valuable insights into market trends and potential rental yields.
- Potential for renovation: Older properties offer the opportunity for renovation and improvement, allowing investors to add value and potentially increase rental income and property value.
- Location: Buying an established property is its prime location in sought-after areas, making it easier to rent out and sell. Unlike new builds that often rely on available land on city outskirts, established homes are situated where people prefer to live, enhancing their appeal to both tenants and buyers.
Cons:
- Maintenance: Older properties may come with their fair share of maintenance issues, requiring ongoing repairs and upkeep that can impact your bottom line.
- Limited customisation: Established properties offer less flexibility in terms of customisation compared to building a new house, limiting your ability to tailor the property to your preferences.
- Competitive market: The current real estate landscape in Western Australia is witnessing heightened demand for established properties, leading to competitive bidding scenarios and limited inventory in desirable locations. Buyers may face fierce competition and potentially inflated prices, making it challenging to secure their desired property within budget.
In Summary
The choice between apartments, houses & land, and established properties ultimately depends on your investment goals, budget, and personal preferences.
- Looking for affordability and convenience? Apartments may be the way to go.
- Seeking the freedom to customise and potential for land appreciation? Houses & land could be the ideal choice.
- Prefer the security of historical data and immediate rental income? Established properties might be the right fit for you.
At Westcoast Property Invest, we understand that every investor’s situation is unique. Our team of experts is here to guide you through the decision-making process and help you find the perfect investment property for you. Contact us today to learn more about investing in Western Australia’s dynamic property market!
Disclaimer
The information provided in this blog post is of a general nature and should not be considered as financial or investment advice. Readers are encouraged to seek independent professional advice tailored to their specific circumstances before making any decisions.
References
https://reiwa.com.au/the-wa-market/resources/articles/strata-fees-explained
https://www.nelsonalexander.com.au/news/seven-benefits-of-apartment-living
https://www.canstar.com.au/home-loans/pros-cons-of-apartment-living
