Should you buy a house or unit? We weigh the pros and cons

It’s a constant debate and a good question, which is a better investment a house or a unit?

In some markets a unit may reap more rewards, in others a house is a better option. So, if you are undecided between a house or a unit, read on to learn the pros and cons in the house versus unit debate.

Pros of investing in apartment

One of the most attractive pros in purchasing a unit is the affordable entry point into the market, especially in locations that are beyond your budget if you were to consider a house.

Another advantage is having body corporate take on a percentage of the responsibility of insurance and upkeep.

When buying into a complex, your ownership is usually governed by strata title. Meaning the common areas of the complex will be managed and maintained by an Owner Corporation and strata regulations will detail the owner’s rights and obligations. You don’t have to make time to mow the lawns or wash the gutters, instead you get to spend more time with family and friends. Buying an apartment, especially one in an inner-city suburb, can become a great long-term investment. Your unit may increase in value over time or become a source of rental income.

Cons of investing in an apartment

Units have one major expense that houses do not, and that is strata. When you own a unit in any complex you almost always have to pay strata, most of the time in addition to home and contents insurance. Strata protects the building’s common areas and pays for the upkeep of common land, like lawns and pools. And if you choose a complex with features like pools and lifts, expect to pay more.

You must also abide by the rules set out by your Owner’s Corporation, and these by-laws may keep you from hanging your washing on the balcony or owning pets. Buying an apartment also restricts your opportunities for capital gain for various reasons. These can include having little control over the external appearance, adherence to body corporate guidelines and your inability to extend or develop the land.

Cons of investing in houses

Owning your own home can bring many freedoms, but also many responsibilities. If you own a house, you must pay for all the maintenance and insurance, and in some cases, this can exceed what you would pay in strata. You could be up for inexpensive repairs like fixing a door, to more costly repairs like replacing a roof. Houses also require a much larger deposit than a unit, and this deposit could possibly increase depending on your credit history.

Pros of investing in houses

One considerable benefit to purchasing a house is the value of land, which appreciates over time, especially in growth areas. You will also be afforded more flexibility and opportunity to increase the market value of your property. Adding value is relatively easy through renovation, extension and development. An extension can easily turn a two-bedroom home into a three-bedroom, and you don’t need to ask for permission, subject to council regulations of course!

The house versus unit debate has many factors to consider. But now that you’re familiar with some of the pros and cons, consider the purpose behind your investment. Are you purchasing to create cash flow? Or are you looking for something to suit your lifestyle? To make a good investment choice, make sure you do your research and remember that not all preconceived notions are correct.