I am a keen investor in Brisbane. I have 8 units. I bought units as that is all i can afford.
I could look at Caboolture, and Toowoomba, or Gympie and other cheaper areas to be able to afford a house, or a block of units.
A savvy/experienced investor told me i need to buy land (with houses on it) not units. I trust their opinion, but if i have been able to buy 8 units all close to positively geared within the last 13 years, then I don’t really need to listen to anyone elses opinions.
Do you think I should continue buying units that have a good return in capital cities, or should i go to cheaper cities to buy a house?
My end goal is to keep all property and one day live off the passive income. Up to now I have really focused on the returns (is it paying off the loan and costs), then my high paying job helps bring the loan down quicker.Do my own thing, with units? or start getting some houses?
Hi VYAW,
A savvy/experienced investor told me i need to buy land (with houses on it) not units.
The reason they would have said that is because land appreciates while buildings devalue. e.g. If a property gains 50% in equity over x years, that likely reflects something like a 10% loss in building value, and a 60% gain in land value.
Hence, without considering everything else (e.g. your risk tolerance, your earning capacity, your available equity, your sleep-at-night factor, etc) it would make sense for you to look for buys that include a good land component. e.g. if buying a flat, look to buying the whole block. Or switch to buying houses with the capacity to develop in time.
Take a look at what one young investor did in a 2 year period – take a look at what and where he bought – it is inspiring :-
https://www.propertyinvesting.com/topic/4410441-thankyou-steve-mcknight/Enjoy !!
Benny
thanks Benny,
if i buy a unit that is in a complex of 4 on a block of land:
wouldn’t my property value decrease due to age (10%), and the land goes up buy 60%/4. So my value in land still goes up.
If the units all burnt down the land value that i own (1/4) has still increased.
??wouldn’t my property value decrease due to age (10%), and the land goes up buy 60%/4. So my value in land still goes up.
True – but what if your land is only 1/20th of the total land size (you are in a block of flats with 20 units). Your land increase in $ terms is miniscule because you only own a tiny portion. Yet your unit drop of 10% is on the whole unit (not 1/20th of it).
Anyway, you get the idea – the land is key.
Benny
Houses……in Brisbane right now!!
Best of both worlds in Brisbane at the moment – i.e. around 5% yield on good blocks where value can be added.
There is a looming oversupply of units around Brisbane city so avoid those.
We have been buying houses in Brisbane from $300k upwards..
Cheers
Chris
Chris White | Pillar Property
http://www.pillarproperty.com.au/
Email Me | Phone MeThe Property Investment Specialists
I avoid units unless i can buy the whole block and have 2 x 6 packs left in my portfolio having sold the 18 x 2 block in Brisbane.
Units have a higher holding cost so i would be looking at freestanding houses.
We are buying good stock on large blocks for forum clients with yields of circa 5.5%.
Cheers
Yours in Finance
0-40 properties in a decade. Email me for a copy of my API interviewRichard Taylor | Australia's leading private lender
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