What property type provides the best return?
On 27 December 2016 in
Next week we’ll all be
taking down our 2016 calendars and replacing them with fresh 2017 ones.
Most people will enter
into 2017 with New Year’s resolutions. Some will try to commit to getting fit
or eating healthier, others are determined to find a new job or go traveling.
There will also be a
number of people looking at investing in property.
For these people - there
is a lot to consider when looking at investing in property. When it comes to
thinking about the type of property think about what type of property best
suits your strategy to deliver long-term growth.
Of course they are
both very different in factors such as where they’re generally located, types
of tenants they attract and in some cases potential capital growth.
Budget also plays a
part in this - as many first time
property investors find more opportunities within the apartment/unit sector
than the stand-alone house market.
So what’s better for
long-term growth and how can you determine which type of property will work
best for you? Let’s look at the differences.
Inner city living drives the apartment/unit
- A key lure of apartments/units are their structural quality and ongoing
management and maintenance. Typically they are a solid block construction and
engineered to hold up to a higher level of foot traffic and wear and tear by
- Their body corporate levies also include a sinking fund, which is
accumulated and used for repairs and maintenance on the building and grounds.
- Apartment/unit complexes usually have a property manager to oversee the
general day-to-day presentation and running of the building.
- The downside to this is the more amenities an apartment complex has, such
as pools, gyms or lifts, the higher the strata fees, so you need to make sure
you include these into your budget.
- Location is also another factor driving apartment/unit popularity. The
inner city market is where a majority of new stock is being built as developers
understand the demand for young professionals and empty nesters wanting to be
near a city’s CBD for work or lifestyle reasons.
- But it’s not just the inner city where
apartments are popular, as many outer urban areas with good infrastructure and
public transport options are proving to be popular with renters.
Homes are where the
- Detached homes will always provide an emotional factor when it comes to
buying an investment property, as it’s the most popular type of residence for
families and the type of dwelling where most Australian’s grew up in.
- Emotion aside, with a house you can generally decide when to spend money
on repairs rather than being locked in to paying strata levies.
- You’re also open to a wider range of tenant types such as those with pets
or kids, and in some cases you can charge more in rent for these requirements.
- However houses generally require more attention in terms of ongoing
maintenance than apartments/units do, but if you approach running your
investment property portfolio like a business, then you would keep your own
‘sinking fund’ to be able to afford any repairs and maintenance when they
- Another option which is becoming more prevalent and popular are detached
townhouses within managed communities.
- These provide the all the advantages people prefer in a detached home,
but with the benefits of communal amenities and an on-site caretaker to oversee
its upkeep, and in some cases there are no body corporate fees.
- Because of the prohibitive cost of land near the inner city, these types
of developments are typically found in the outer urban areas where
infrastructure such as schools, shopping hubs and medical services are all
Stats from the most recent RELM report indicate the following -
investment property in overall Darwin
Median price for a house: $550,000
Median price for Unit/Townhouse: $460,000
Median overall weekly rental in overall Darwin
Three bedroom house: $511.50
Two bedroom Unit: $386.50
Yields in overall Darwin
Three bed house: 4.8%
Two bed unit: 4.4%