Dear all,
Thanks for a great forum am finding all of the threads extremely useful!!
I am currently considering purc
hasing my first IP for around $400k and just wanting to know whether any of you had any particular reservations with investing in townhouses?
Ideally I would like the first IP to be within 5k of the Brisbane CBD. My thinking at the moment is that because I am currently renting (recently sold PPOR to start property investing) I can always move into the inner city property later on should I need to. Given the price range I guess I am limited to either an apartment or a townhouse. I would have thought because of the land value alone this would make a townhouse a better investment choice (especially from a capital gain perspective).From a renting perspective I have always preferred townhouses as they usually provide a good outdoor space and more storage.
Is anyone able to provide the key differences/things to consider between investing in a townhouse as opposed to investing in a unit. Is there anything in particular I should be careful of when considering purchase a townhouse in particular.
Your advice here would be greatly appreciated!!
Josh
Townhouse – for the reasons you have already highlighted. Note that sometimes a townhouse will be on its own title, and sometimes it will be subject to body corporate fees (eg due to shared driveways). You need to ask that question when enquiring about a property.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM, was just wanting to make sure I wasnt missing anything significant!
Josh
Hey Josh
I recently bought an investment property (a 1 bedroom apartment) about 6km from Canberra CBD.
In terms of what is better as an IP, it depends on the market in the area you're looking at. I did a lot of research on my suburb before purchasing the apartment rather than a townhouse. A few reasons:
– there is strong demand for apartment living from students and professionals who want to be close to work (given the proximity to 3 schools/universities) and government departments
– close to a large shopping centre
– close to a large lake and bike paths
– close to public transportSo I determined that I would get a better rental yield and also be able to find a wider pool of tenants for an apartment than a townhouse given that the market in that area were mostly students or young professionals wanting an inner-city lifestyle close to puiblic transport, places of school.work and the shopping centre.
The townhouses were generally older (not as good depreciation) and more expensive. With townhouses, there is more that is likely to go wrong as you have a garden, hot water system etc…. where as an apartment has most things covered like the aforementioned under the body corporate, so really if anything goes wrong then it's up to the BC to fix. However with that said, you have a quartely levy that you'll have to pay, however this is tax deductible. I personally think an apartment is more easy as an IP because of the BC.
Also, from what i have seen many professionals in Brisbane are looking at apartment living (similar to Canberra). As it turns out, my place was on allhomes (like realestate.com.au) for 2 days before I found someone and i'm currently getting a rental yield of 5.9% with capital growth as well.
You're right about land appreciating more, however it depends what you want – strong yield or strong capital growth. You might be able to get both, however if you eventually want income from it, then look for yield. It really depends what you want out of it and whether you want to make money from rent now or money from paital growth if you decide to sell or borrow from it for future properties.
Just my 2c.
Chrs
Matt
Thanks Matt,
Appreciate your detailed commentary here. There a few newer style townhouses within 5k of the CBD so location wise thats not really an issue however take your points on board re more things can go wrong with townhouses, as that has been in the case with a couple of townhouses I have rented in the past requirring repairs on these things.
One thing I am finding with a lot of apartment buildings in Brisbane is the high body corporate fees which has put me off a little. I know there are older type cavity brick apartments with low body corp but am a little concerned about the low depreciation I would be able to claim. Obviously you should not discount a property on the lack of depreciation benefits but for some reason I get a gut feeling that townhouses is the way I would like to go……will definitely take into account future repair issues associated with townhouses when making my decisions though.
Thanks again,
Josh.
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