What type of home is a good investment?

Investing in a townhouse

Often within a row of houses, sharing one or more wall.

General advantages:   

• You own the home

• Middle ground between a house and a unit

• Locations near transport and schools could drive growth 

• Reasonable price point 

• Lower strata levies than units or no strata at all

• Possible Less maintenance than houses
   

General things to think about:

• Less land than a house means less opportunity to create growth  

• Other owners may share common property and land ownership 

• Possible More building and reno restrictions than a house 

• Noise from shared walls, potential for disputes

• May need more maintenance than an apartment

• Some have strata fees 

• No strata? You’ll need to draw up neighbour agreements about shared spaces.
   

Investing in an apartment or unit

General advantages: 

• Lower price point 

• Lower council rates and utility bills 

• High demand locations can give higher rental yields than houses in less favourable areas

• Inclusions like lifts, pool, gym and extra security 

• Body corporate organises the maintenance.
   

General things to think about:

• Strata fees aren’t cheap and tend to go up

• Limited options to manufacture growth due to smaller land size

• Body corporate disagreements 

• Slower capital growth can better suit an income stream strategy

• Families prefer houses with gardens

• Lower rental yields than houses

• Land ownership is shared

• Check properties with your lender, as we may not lend against certain addresses (particular apartment blocks, areas, company titles and tiny units) 

• Strata permission for certain renos, like updating a bathroom

• Company titles: you only have the right to occupy the unit as shareholder 

• Dig deeper: due diligence may uncover major renovations or problems with build quality. For example, check body corporate manager emails that may give owners a sneaky heads up about issues or upcoming special levies not yet mentioned in the minutes.
   

Land as an investment

General advantages:

• You're the landowner 

• Less competition from other buyers 

• Larger lot or nicer views for a lower price point 

• If rezoned, the value could increase

• Market value might rise (capital growth strategy) 

• Potential to add buildings or subdivide to create extra monthly income, or to help family onto the property ladder

• Fewer costs, less maintenance  

• Build when you have more funds.

   

General things to think about:

• Rental income and cash flow only start after building

• Land value could fall after zoning changes

• Added costs can include public liability insurance and fencing 

• Independent valuations and surveys  

• Council green light needed for building plans

• Chat with neighbours for the property lowdown

• Ensure land title’s clear of liabilities 

• May not have mains water, electricity, sewerage and internet  

• Land can attract fewer buyers when selling

• Tax treatments for vacant land differ, check with your tax advisor

• Not all land qualifies for a loan, check with your lender.

   

House & land package investments

General advantages:

• Your build is under warranty 

• Small builder's deposit upfront, the rest when the build's done

• Price locking can gain more value at completion in a high growth market

• Depreciation could be a deductible tax expense – get tax advice

• Government grants like New Home and First Home Owner.

General things to think about:

• Developers get their share, eating into your financial return

• Some lots can be on the smaller side

• Potential construction delays

• Do your homework on the builder and quality of build 

• Infrastructure like schools and transport might take a while to catch up

• Check if landscaping, fencing etc are part of the deal 

• Check rent for similar properties in the development 

• Little say on new neighbouring properties  

• In population growth areas, continual new builds could stagnate value

• Ask your lender how the final value could affect your LVR⁺ 

• Ask your legal agent what happens to your price lock if the build’s delayed, or if your builder goes bust.

Each State and Territory has its own take on property type definitions. Your local council or town planner can fill you in.

• Villas are often strata titled, similar to townhouses. 

• Terraces could be Torrens title or strata title, depending on the age. 

• Duplexes are one building, two homes, often with a shared wall. Titles can be single or split, affecting ownership and sale options.

Defence Housing 

Within 30km of a Defence spot? You could build or purchase a quality rental property to lease out.

NDIS investment properties

The Government guarantees a minimum rental return if you’re purchasing property as part of the National Disability Insurance Scheme.

Commercial property

Buying property under your business name? Your local business Property Specialist help you plan your move.