Buying Investment Property - Apartments or Houses?

rhd83 on 19/03/2023 - 22:31
Last edited 20/03/2023 - 11:54 by 2 other users

Hi all.

My wife and I are looking at getting back into the market. We have owned a townhouse before but sold it a few years ago. We had a large amount of money after we sold our old house and the savings just started to disappear. Holidays, IVF, etc. At the moment we are both working however we have very little savings.

We are currently looking at our options. We currently live in Western Sydney and realistically buying a property is just not achievable with our current incomes. We are looking at investing in the following -

  • Buying a 2-bedroom apartment in another state (Thinking Adelaide, Canberra, or QLD)
  • Buying a small home in another state (Same state as above)

My question is with apartments dropping in price now and the issues, many builders have had, would you buy an apartment off the plan (min deposit). Or save hard and have a deposit for a small house. (No strata, as many building issues etc)

Home & Garden

Comments

  • Mechz on 19/03/2023 - 22:48
    +17

    I would never ever buy off the plan. Those scum bags make so many changes before it's ever finished.

    • orangetrain on 20/03/2023 - 10:25

      Try taking a contract to a lawyer before signing. Builders will ghost you.

    • boomramada on 20/03/2023 - 13:55

      I have bought two in past without any issues. It's all about builders. Make sure to do a background search on the builder.
      It is imporatnt to study the actual plan by the archtect NOT the pretty sales materal. Also get a convancer who good at off the plan properties will also help.
      It doesn't matter off the plan or not, they can still screw you up. Especially when good and service continuously going up these days.

  • try2bhelpful on 19/03/2023 - 23:07

    Houses generally appreciate better than apartments. I would have no trouble renting an apartment but I would never own one.

    • bargaino on 20/03/2023 - 01:46

      Buildings only depreciate in the long run, and require money for refurbishment.
      Land has gone up in value in the past, but past returns are no guarantee, as they say.

      So if you are not buying a place to live in, do the sums on rental yield vs costs. No easy answers without a crystal ball.

      • try2bhelpful on 20/03/2023 - 07:22
        +1

        Apartments have body corporate fees to maintain the buildings, you could end up with a bad neighbour one wall away, things like solar panels are tricky. I agree with the past returns comment but the graphs are pretty consistent. I do agree on the crystal ball though. I would’ve bought an investment property as well.

        • oO0Dam0Oo on 20/03/2023 - 09:50
          +1

          Also no control (or very little) over body corporate decisions. One building defect can become a nightmare of a grand scale.

  • avoidfullprice on 19/03/2023 - 23:11
    +1

    If you haven’t heard, big building companies been collapsing recently and so off the plan places are risker than ever to purchase with. So you may lose out on your deposit

  • Benoffie on 19/03/2023 - 23:49

    Apartments in Adelaide are rarely south of $600k. Many are releasing north of $1m. They're only in the CBD or inner ring suburbs. As a result, premium prices.

    Unfortunately, due to many others in the east making similar decisions, the days of cheap properties in Adelaide are gone (certainly from our perspective).

    Is there any reason why you cannot relocate to somewhere more affordable? And what is affordable? What's the budget?

    • AustriaBargain on 20/03/2023 - 00:17

      You can buy cheap properties in cheap suburbs, but they will stay cheap for the foreseeable future. Not really a get rich quick scheme most "property market investors" are looking for.

      • Benoffie on 20/03/2023 - 00:55

        Absolutely. I mean, if the OP wants a place sub $400k in Adelaide theyll be looking at Elizabeth, Gawler etc and understanding the socio-economic realities that come with that.

        But there will be no apartments out there. They tried once, public housing tenements and much like the UK,did not end well.

        1 bedder in Adelaide atm = $250-$350 a week (unless it's stupid special)
        2 beds - $3-400
        3 beds -$4-500
        4 beds - $450+ depending on location

        Seems great rent, but do the math if you're borrowing 90%+. Definitely negative gearing territory.

      • Mechz on 20/03/2023 - 12:51

        Eventually everything goes up. Just depends how long you want to wait to gouge FHBs.

        • AustriaBargain on 20/03/2023 - 13:13

          If it doesn't go up as much as wherever else you would have invested it then it comparatively went down.

  • dcep on 20/03/2023 - 00:20

    …with apartments dropping in price now

    Has it gone down to pre-pandemic levels yet ?

  • p1 ama on 20/03/2023 - 00:57

    What's your budget, and if not to live in, then why property vs. other asset classes?

  • Ryanek on 20/03/2023 - 08:50

    No strata with land and home

  • Ash-Say on 20/03/2023 - 08:58
    +2

    After my 2 bedroom unit experience, I wouldnt touch unit/apartment again.

    Strata keeps on increasing every day but there is hardly any capital growth. If there is any issue with Strata related repair, it takes ages to repair.

  • Duckie2hh on 20/03/2023 - 09:34

    House>>> apartment

  • ForkSnorter on 20/03/2023 - 09:48

    My question is with apartments dropping in price now and the issues (Many builders have had) they have had would you buy an apartment off the plan (min deposit)

    Never buy off the plan. Look at 5-15 year old buildings with good reputation.

    Apartments are good for rental income or for living, but probably not as good as a house for capital gains in the longer term. May depend on the location and timing and circumstances.

    Or save hard and have a deposit for a small house. (No strata, as many building issues etc)

    Strata fee is a non-issue, because depending on the building, it can actually save you money (i.e. it usually includes insurance, maintenance/cleaning, may include facilities such as lap pools/gyms, sinking fund for emergency repairs, etc., plus your council rates and bills/insurance may be much cheaper than a house).

  • Rako on 20/03/2023 - 10:02
    +1

    What about buying a house & renting it out? Perhaps you could afford to do so because you would have rental income & loan interest & other expenses are tax deductible.Ideally buy a house you would be happy to live in. After a few years you could move into it yourself which is why it's important to choose an area that would suit you. Also important in this situation to live in it initially for say six months that way after moving out you have a six year CGT exemption because it's you principal place of residence.

  • JimB on 20/03/2023 - 10:16

    Better to buy a house interstate.

    The only people who make money from Apartments are the developers and builders.

    There's a reason why Harry Triguboff is a billionaire and it's not because he purchased apartments.

  • ForkSnorter on 20/03/2023 - 10:25

    https://www.realestate.com.au/property-apartment-qld-brisban…

    If I had spare money, I'd buy this as an investment. If you can handle inner city living, this would probably have good rental return, plus the olympics is coming to Brisbane in 2032. This is an insane price for a 2-bed, 2-bath plus 1 carpark and lap pool in CBD.

    • Some Human on 20/03/2023 - 12:07

      I like how the laundry sink has an extra hole so the grey water doesn’t go into the sink. That’s the best way.

  • orangetrain on 20/03/2023 - 10:27
    +1

    Its the wild west with apartments thanks to deregulations. Even insurance won't touch/cover it.

  • cupcake on 20/03/2023 - 10:49

    Why did you sell the townhouse?

    • Some Human on 20/03/2023 - 12:08
      -1

      If I had to guess, IVF is expensive.

      • Mechz on 20/03/2023 - 12:53
        +1

        Wait until they fins out how much actually having the kid costs.

  • Sweet3st on 20/03/2023 - 10:53
    +1

    Better to buy apartment in 1970's block. Most are very well built.

    • try2bhelpful on 20/03/2023 - 11:13
      +1

      I do agree if you are going apartment look for an older block with a small number of units. However, make sure you confirm there aren’t underlying issues either.

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