Folks,
I've been a member of this forum quite a while ago and I could not find any discussion that has been going around for: What would you prefer house or the unit?
My first investement is in the CBD and I am paying around 1900 Strata (you might say it is huge but it pays goodest rental).
I am planning to go for my second investement and this time I want to make sure that strata is less or nill.
What would you prefer house or the unit?
Best,
AmitHi Amit
It’s been covered quite a lot.
Here’s a few threads to get you started (a little outdated but still relevant).
https://www.propertyinvesting.com/forums/property-investing/general-property/4326238
https://www.propertyinvesting.com/forums/property-investing/help-needed/4332681A quick search will reveal many more.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
umm I must not be searching when beer in my hands
thanks Jamie.I choose the house for a few reasons
Firstly, as you mentioned strata fees don't exist, meaning more positive cash flow due to the lower expenses
Secondly, because you can do a lot more to improve both the cashflow and the value of the house. You have more say over renovations and you have the power to renovate the exterior as well as the garden.
You can do more with houses such as subdivide land, even knock them down to build new houses…you can't do either of those with units. You can turn a house into dual occupancy. Plus I am a strong believer in owning the LAND underneath the house. Land is a finite product, they aren't making any more land (except in Dubai where they make their own islands…..actually all the usable sand has run out there so they can't even do that anymore.)
However, on the flip side many people prefer units. They create a cheaper entry point into the market and can be lower maintenance.
I would own units IF I could own the whole block
Ryan McLean | On Property
http://onproperty.com.au
Email MeYour points are valid to consider but when I compare both I get this:
House maintenance = Strata cost for the UNIT such as garden, council, insurances
House = less rental growth and less tenant.You are right with the point on duplex + freedom but both will come with its cost …
For what it's worth I agree with Ryan. I look for houses which have extra land to add more dwellings or subdivide.
We do have strata titled units where we own the whole block which works ok too, no strata as we just pay for all the outgoings for the whole property. ( We will sell a couple of blocks on shortly though as they don't fit our long term strategy
)Here's a thought for you:
Get a house, and whack another house in the back yard. Call them both units then if it makes you happy.
Here's another thought:
Get a large house, wall it off in the middle somewhere and add another external entry door. One house has become two units. Ta da!!! Add in a cost-efficient kitchen and bathroom to the unit that appears to be all rooms and no facilities, and away you go.
Either way, you are changing the property to increase its cash flow, but you still own the land and all the dwellings on it. You've added value.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
ryan mclean wrote:Land is a finite product, they aren't making any more land (except in Dubai where they make their own islands…..actually all the usable sand has run out there so they can't even do that anymore.)Gold !!! Love it Ryan !!! Thankyou for providing this evening's laugh
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:Here's a thought for you:Get a house, and whack another house in the back yard. Call them both units then if it makes you happy.
Here's another thought:
Get a large house, wall it off in the middle somewhere and add another external entry door. One house has become two units. Ta da!!! Add in a cost-efficient kitchen and bathroom to the unit that appears to be all rooms and no facilities, and away you go.
Either way, you are changing the property to increase its cash flow, but you still own the land and all the dwellings on it. You've added value.
Assuming that means is easy to get an approval from council.
Shouldn't be too hard if you do your homework and make offers "subject to being able to get approval for this and that"
Just throwing ideas onto the table to get people to think outside the square a little
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
That is what exactly I have been thinking quite a while when I see a line of unit and one in between is the house. That means rest of those who used to be houses are converted into units, so by mean, after approval one can create 6 / 8 block units and then can run the Strata too… so more money!!!
umm like it the way it works…
And if someone else has done it in the street, they've done all the hard work for you and set a precedent with council. You can argue the "well you let them do it……" line
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Well, it depends…and location is important. Assuming an unlimited budget, it'd be easy to say that a house in a leafy inner-city bayside suburb is bullet-proof, but everybody knows that. Cost-wise, the price of an inner-city apartment could probably buy you a 3/4 bedroom house on a quarter-acre block in the outer suburbs. But the big difference is location: one is nearer to where 'all the action' is, whereas the amenity and activity levels in an outer suburb can be very much less.
I'm also a big fan of owning actual land. There's nothing like stepping into your backyard on a summer evening after work or during your weekends and feeling like you're in your very own castle. As was mentioned above, there is a lot more that you can do to your own house than you would for an apartment or unit. What you choose to do is up to you. It is not necessary to speak to others in your block and discuss whether the driveway should be repaved or whether gardening needs to be arranged. However it also means that when bees invade your roof or a tree drops a mega-big branch in your backyard, the buck stops with you and you need to get everything arranged yourself.
Without a doubt, owning a house with a big backyard is still very important for some but from what I've read, we also need to consider demographic changes when buying an investment property. Something that appeals to you may not be so fine for a tenant. For example, tenants would prefer not doing any gardening and would prefer something with more security, the ability to 'lock and leave', as it were. And this would be very similar for aged tenants who are downsizing and renting something smaller, taking the time to travel the world and enjoy themselves.
The argument of house vs unit/ apartment is hence not quite so simplistic. Perhaps a good balance would be to buy a decent house with OSP (preferably with double garage) with its own separate title and driveway (that would appeal to the demographics of the tenants in that particular area) on a low-maintenance block of land (eg. subdivided from a bigger block). This way you get some land, there is no need to worry about a body corporate or associated fees, your tenants get a backyard that they can enjoy but not so large that they'd spend weekends maintaining it (or leaving it in disarray for you to fix up at the end of tenancy).
The main reason I'd started this thread was that I am paying around 600$ per month as a strata. for IP UNIT that fetch 800-900$ per week rent . However, the big benefit is that it handles everything, starting from insurance to cleaning, or whatsoever. Indeed it is high as compare to any outcity . but Since it is in Sydney, Townhall, it is worth to mention the return that we get out of it.
Now, when I am hunting for the next one, that is exactly came back into my mind that why Stata is enjoying my 600$ and let me dig into propertyinvesting.com and see what others are thinking.
Main concerns that I've found of not owning a house are:
– You are responsible for everything
– You are response to pay for Insurances, cleaning, council and also putting a garbage box out of your house.
– You have to put big down payment straight!
– roof is leaking, I am responsible, water is not coming I am responsible….That said, I belongs to Y generation and I doubt that I will be interested in doing such things. I just want to live and enjoy, either I rent or live as a owner, I don't have time for house maintenance and I am happy to give strata , not 600, but 200-300 $ per month.
Now that is my story, but I am very sure that majority of us would want to do the same thing so that means if I will buy the house, how can I ensure that the tenant will be nice with the property, or I must say that only 2 people will walk to view my house during inspection.
I really doubt that freedom factor comes in between; at least for next gen.
We don't like doing bbq at my back yard rather I will go to the beach or park; may be it is a age factor I still have to see… but I really doubt that I can buy house in the inner city, in less than 800K.
It is again back to the circle, either you do or not, it is you who is going to make a decision
– both have got drawbacks, and benefits.'A couple of thoughts for you:
If it is an investment property, you can get the property manager to handle the bills and maintenance for you.
If you are planning to live in it, you will see how quickly you outgrow the property if and when you have children.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I understand your concerns with owning a house as opposed to a strata-titled property. If you prefer a more hands-off approach it is fine to let the body corporate manage these issues instead of doing it yourself. This however assumes the following:
1. The body corporate is actually capable at managing all matters pertaining with the property. They keep everybody's interests at heart by ensuring the property is in the best condition at any time and hold sufficient amount of money in the sinking fund.
2. The others who are living in your block are happy to contribute as necessary.
Now, if you land up with a body corporate that is incapable, there are expensive repairs coming up and there are insufficient funds in the sinking fund (necessitating unexpected contributions from yourself shortly after purchase), and/ or inconsiderate, uncooperative neighbours who aren't willing to contribute, those are all major issues. Just be careful to check everything before you buy. This means getting the necessary inspections done, going through the meeting minutes, checking the sinking fund etc. Better to get a qualified solicitor to do this.
I might have read somewhere of an unfortunate instance where one person living in a small block of apartments had a leaking roof but could not get it repaired because nobody else in the block wanted to contribute to the costs. The body corporate was probably useless as well. Turns out that one landlord owned the rest of the apartments in the block…probably hoping this last owner would sell out and allow the landlord to own the entire block of apartments (perhaps for the sake of redevelopment).
By the way, your property manager does background checks on prospective tenants to see if they have been good rent payers in the past, and looked after previous rental properties. However, at the end of the day, you cannot be certain the tenant will look after the property. This is why you have in insurance. You need building, contents, landlord plus tenant protection insurance. Try AAMI.
Don't stress. If the tenant ruins your property, you might be out of pocket say $600. The excess fee for the insurance claim. But who cares about $600 if the property went up in value by $50,000 in one year huh? All you need the tenant to do is babysit the homeloan interest payments for you for a while so that you can be rewarded with the capital growth. Don't get attached to your pretty walls and your nice benchtop. It is an investment. It is supposed to be about numbers.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Totally agree with Jacm and fword, the issues you’re concerned about are mitigated by utilizing a good property manager and taking out landlord insurance. For what it’s worth, the body corporates I deal with for two of my properties are more of an expensive hinderance than anything else – I honestly can’t see what they do in exchange for the quarterly fee I (and every other owner) pays.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jac – "You need building, contents, landlord plus tenant protection insurance. Try AAMI."
Even though it is body corporate building, should I go for building insurance?
Jamie – Indeed, you are right. I really started hating these money sucking machine and govt./ council has no control on where the money is going and so forth. Through proxies they are always able to get majority of vote for increasing the cost.
fWord – Where can I hunt for the house when the cost is too high in inner west. If I go anywhere else then the following word comes around in my mind. "fword says – Something that appeals to you may not be so fine for a tenant."
fword – ""I might have read somewhere of an unfortunate instance where one person living in a small block of apartments had a leaking roof but could not get it repaired because""Yes, that I've seen in chippendale property that I went to inspect… the property cost was 100K less than market price, but strata was 3000 per quart because of leaking roof top.
So in overall you all prefer houses?
If yes then any idea where can I go and hunt them
My budget cannot go higher than 500K or near by and I am looking for at least 2-3.Thank you very much for constructive discussion here and also for sharing your valuable experience.
Re insurance, check what your body corporate has, and you cover for the gaps.
Where to look? Blacktown
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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