Hello

Traditionally property investors think that buying an apartment or unit in a good area is the way to go. Of course, this is a rather large assumption, I’m pointing out that a lot of investors consider these properties the most blue chip to invest in. To me it’s slightly old-fashioned thinking. It makes the very 1990’s assumption that an apartment or unit is easier to lease out and that you won’t be left with a vacant property. I’d ask when was the last news report you saw that said that any type of property was hard to let? From my experience everything will lease out if the property is in decent condition and the rental asking price is reasonable.

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So, what would I buy if I had a million dollars to spend on an investment property? I would look for a well-cared for but fairly original house on as big a block of land as I could find. (preferably within 40km of the CBD) It would be worth checking local council guidelines as to whether the land size would be large enough to accommodate 2-3 units on it in the future. One of the first things that I learnt in real estate was that in general land goes up in value and that buildings depreciate roughly 2.5% per year. Meaning that in theory, the larger the land content the more likely it is that your property will go up in value.

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When considering what to invest in, it is also important to think about your out of pocket expenses. One of the main ones is council rates. In general council rates will be higher for larger blocks than it will be for smaller apartment and units. However, another rather large out of pocket expense is owner’s corporate fees and for units and apartment these can be very expensive. Around $6,000 per year is not uncommon, especially if there is a lift and/or shared facilities like swimming pools and gyms. It is not common to pay owner’s corporate on full block houses.

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Of course, I have mentioned just an overview of the pros and cons of different types of investment properties and there are many issues to consider prior to making a purchase. For example, with a newer property you may be able to depreciate the fitting and fixtures to help bridge your out of pocket expenses.

What I have written here has been my experience in over 21 years of work in real estate as well as being an investment property owner. It may not suit your personal situation. Before making a decision that is appropriate for you, it is important that you seek independent advice that would best suit your individual circumstances. Obviously, this is a very brief overview and there are multiple issues to consider.