If you are wanting to enter the home ownership market but aren’t quite yet in the position to be able to afford a house, an alternative option rather than not purchasing anything at all would be to look for a unit that suits your budget as depending on what area you are looking in they are typically more affordable than a house.
In Adelaide the median house price is at $591,875 with a rental income of $420 per week whereas the median unit price is $425,250 with a rental income of $425 per week. From an investor point of view the benefit is actually far greater with a lower level of risk and initial cash outlay. If you were to sit out of the property market until such a time that you have a substantial sized deposit to afford a house you might find the prices will outgrow your ability to save.
Some of the notable things that come with house ownership are you will have ongoing expenses such as council rates and land taxes payable on a yearly basis. Another thing is if you have an older house you may have frequent maintenance jobs/underlying issues that will need to be up kept and kept on top of quite regularly.
With unit or apartment ownership you will have such things as strata fees payable each quarter from time of purchase for as long as you are the owner of said apartment/unit and all the maintenance jobs and repairs are handled by and organised through the body corporate.
Houses and units are both in high level demand on the rental market in the right places. To make the absolute most of your investment choice it will be best to look for properties where rental demand is high, with such things going for it like being close to universities, ease of public transport or lifestyle areas with close access to schools, parks, cafes, shops or even beaches. If you are in doubt and unsure where to start your research it is always worth looking online at realestate.com.au as well as getting out on a weekend to find a number of local real estate agents to talk to in the respective areas to see what they say. After talking to a few agents you will start to get a feel and see a trend in what they are saying giving you a clear idea of what the areas have to offer. The next step if you haven’t already done so will be to meet with a broker and find out your price range and then try to find something within that that ticks the boxes.
With respect to the investor market it is the owners responsibility to keep the property in a liveable condition for the tenants, for instance should the roof start to leak in a bad storm it is up to the tenant to notify the owner/real estate agent and for the owner to act upon repairing/rectifying the issue ASAP (within reason).
It is no secret there are many reasons for and against any type of property whether it be a fully detached house, semi-detached house, unit, townhouse or apartment. The right investment choice for you will depend on your financial position and investment strategy you have in place to be able to make use of to the maximum potential. Talking to an experienced broker will broaden your knowledge of what you are capable of as they will be able to work out a strategy suitable for your situation taking into consideration your short and long term goals.
A house will generally have a higher entry point and higher level of growth due the land component and the size, in some cases they may not be positive geared which you as an investor might not be favourable to this. A unit on the other hand will generally have a lower entry point with higher rental yields being more favourable from a cash flow perspective as it may be positive geared allowing you to grow your portfolio at a rapid rate.
If you would like a free review of your situation and would like to know if a unit or house is within your purchase range or would like any reports on a specific suburb please don’t hesitate to get in touch with your mortgage broker Gerry today and he can provide you with complimentary suburb/property reports which he can talk further about should there be any questions/queries you may have.
Information contained in this article regarding median prices courtesy of www.realestate.com.au