Hi all,
Regarding purchasing of property at the moment, I am considering investing in a unit within the next few months instead of a house.
Any disadvantages with a getting a unit as opposed to a house? I am thinking a 1 bedroom unit in the CBD area where rents a relatively good.
Regards,
AjayHi 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.
Hi petrona – thanks for the info.
Regarding the reduced capital appreciation potential, do you know roughly how much percentage lower than regular house appreciation the growth rate would be?
Regards,
Ajayajayayyar wrote:Hi petrona – thanks for the info.
Regarding the reduced capital appreciation potential, do you know roughly how much percentage lower than regular house appreciation the growth rate would be?
Regards,
AjayHow 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
AS wian indicates, units are the only choice in many parts of the world, planners in Aus are pushing that way. When the realisation hits that it is cheaper to live in/around the cbd, not to commute (by car) and that entertainment is at your doorstep – then the pros of city living will boost capital appreciation. As per usual, you need to consider location and keep in mind the strata levies which are payable (some are quite horrific ie $10k pa +)
Scott No Mates wrote:AS wian indicates, units are the only choice in many parts of the world, planners in Aus are pushing that way. When the realisation hits that it is cheaper to live in/around the cbd, not to commute (by car) and that entertainment is at your doorstep – then the pros of city living will boost capital appreciation. As per usual, you need to consider location and keep in mind the strata levies which are payable (some are quite horrific ie $10k pa +)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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
