House vs Unit Purchase

Hi Ajay,

There are disadvantages, certainly.  Off the top of my head, they include:

• decreased capital growth compared to houses;
• regular strata fees (normally every quarter);
• the occasional 'special levy' when the common areas need to be improved (eg. repainting gutters);
• generally higher tenant turnover;
• other tenant-related issues, such as noise from adjoining units, which can upset your tenants; and
• restrictions on what you can do with respect to renovations – you'll need approval from the council of owners to install a/c, for example, as it impinges on common property.

That said, there are advantages as well.  We've always invested in units, as they're cheaper to get into, and so are a good starting point.  Gardens aren't a problem, as the council of owners organises maintenance in common areas.  Also they're generally easy to tenant, as they're cheaper than houses to rent.

How longs a piece of string?

Fact is, no one knows .  I personally think that Australia is behind the rest of the world with regards to apartments.  Most people who live in new york or london or any asian city live in apartments. and they would be damn expensive if they are in a prime location –   but because australians mostly live in houses, i suppose the capital appreciation ( at the moment ) may be a little better.  However, i personally believe that good apartments in areas like sydney with a view of the harbour , and in high potential areas like docklands in melbourne, will be good in the long term..  I personally own 2 apatments in docklands melbourne, and the rents i am achieving are astronomical, and i can see capital growth occuring over the long term, but you must be willing to hold on to them, long term….

cheers

wian

good points

i have 2 apartments in the CBD and 1 house in the middle suburbs of Melbourne.  There are definitely pros and cons of chosing apartments or houses. For instance, i bought my apartments brand new, and the depreciation to be claimed against my tax was much higher than if i had have bought a house, and nothing has needed fixing with my new apartments for the last 5 years, which most likely wouldnt have occured if i had have bought a house, and finally, because they are in a great location, the rents have grown by at least 20% per annum, which would have not happened if i had have bought a house.  On the flip side, i suppose i have missed out on some capital growth, but i certainly know i would have had a battle paying off the house due to the lower rents and i would have been getting less of my tax back due to the poor depreciation etc

so there is plenty of food for thought there

My main belief is that you always look at property long term, say 7 years – but impatient people want to make a quick profit, and thats where they can become un stuck

cheers