House vs Unit: Which is the better investment?

It is a common debate among investors about whether units or houses are the best dwelling to purchase. Nationally 58% of all units are owned by investors compared to 21% off detached houses. Both have their pros and cons which you need to consider.

Houses
Due to the size and facilities of a house one of their key advantages is that they can accommodate a wide range of tenants. From families and roommate sharing to retired couples, houses have a large market.

As you also own the land it is a lot easier to renovate and expand if your plan is to constantly add value to the property. However the flip side of this is that it is more difficult to maintain. As well as having a garden all the facilities will need to be regularly checked and repaired.

Also expect houses to be open to higher council fees. Make sure you budget for these as well as the other expenses associated with owning a house.

Units
Units are popular as they are generally cheaper than houses and a more affordable entry point into the market. The differential has reached a record high nationally with the average of the capital cities being $95,000, according to the latest research from RP Data.

Being smaller in size and without a large garden, units are easier to maintain and require less check ups. This results in less expenses being dedicated to repairs as well as saving time spent resolving any issues.

A main drawback of owning a unit is that it is often difficult to do large renovations to the property. This is because there are body corporate rules which limit what you can perform, which may impact future capital growth.

Which is better?
Like any investment it is important to know the expected returns. According to the Real Estate Institute of Australia (REIA), there’s not much of a difference in price growth between each dwelling type. Over the past ten years, median house prices have increased by 81 percent, while median apartment prices increased by 72 percent.

Which dwelling you choose to add to your portfolio should come down to what best suits your strategy and risk profile. Of course there are other factors you need to consider such as the location and what tenants prefer in each area. If you do your research and get these right both property types will likely result in a profitable investment.

If you are looking to invest and need financing or more information please contact us on (08) 9289 7777 or info@nullrdfinance.com.au.