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Hi all,
I’ve been doing some research into which type of properties to buy (apartment, townhouses, units, houses) and I’ve concluded that townhouses give a solid capital yield (7% per.ann) and decent rental yield (5% per.ann) while having lower holding costs than houses. They are also less expensive than houses and although they don’t provide the capital yield that houses do, the lower holding costs and price don’t hamper your burrowing capacity as much, allowing you to purchase more property. Is my logic correct here? I live in Victoria btw and I’m mainly discussing the eastern suburbs. My plan is to purchase around 10-15 properties throughout the next 20-30 years. Any thoughts or input about my idea here would be greatly appreciated. Thanks everyone :)
Hi jeeakz,
One thing you might not have considered when purchasing a Town House would be any Body Corporate fees and/or restrictions. Though you might own some land, there will also (likely) be some areas that are controlled by others making up the property (other owners of the remaining townhouses). A Body Corporate usually means extra expense, so I hope you have taken that into account. Same for units.
As you said, the capital growth will be less, mainly because you own less land. i.e. your block is not able to be further subdivided to increase its value. And, I believe there may be many others like me who DON’T want any Body Corporate determining my decisions about anything. So for me, it was always houses and their land, thank you very much.
If you want a 5% yield, there are areas where you can get that in houses. Just be prepared to shop around and look further to find them. Could be other centres or regional areas, but 5% is still an option for some houses.
Did you ever get to check out “Westnblue” and his actions about years back? Here’s his story – let me know in reply if what he did is something that you could (or would) also consider doing. It seemed to do him pretty well at the time :-
It’s a good story eh?
Benny
