Investing in an established dwelling
There’s a lot to be said for investing in an established property. It brings none of the guesswork and potential stress of building a new place, and the property can potentially be tenanted as soon as you take ownership. It may even be sold with a tenant already in place. This ability to earn a rent return from day one can be a plus for your cash flow.
With a wide selection of properties available, it’s worth considering which type of residence would be right for your needs.
Apartments vs houses
Broadly speaking, apartments can have the advantage of being more affordable than houses. Across Australia’s state capitals, the median house value is $659,542 compared to a median value of $547,973 for apartments. That’s good news if you have a tight buying budget.
Also in favour of apartments, rental yields tend to be higher. Nationally, apartment yields are in the order of 4.3%, above the average yield of 3.7% on houses.
Units can bring another plus too. They can have lower council rates and maintenance requirements. The flipside to this is that owners are expected to pay body corporate fees and strata levies, which contribute towards the cost of maintaining common property.
Torrens title versus strata title
A key point of difference between apartments and houses may be the “title” or type of ownership you’re likely to have. “Torrens title” typically applies to standalone properties like a house, and it gives you ownership of the whole property – the house and the land, above all others.
Strata title applies where there are areas of common, or shared, ownership is usually the case with apartments. So while a buyer may have ownership of the interior of their unit, the common areas tend to be collectively owned and managed through an Owners’ Corporation.
Investing in duplexes and semi-detached properties
In case you’re unsure, a duplex is a single dwelling made up of two homes that share a common wall. Unlike a semi-detached house, which typically sits on its own separate block of land, both homes in a duplex may be included in one title. Unless each home has its own title, they cannot usually be sold individually. This is something to consider as an investor as it could make the property hard to sell further down the track.
Information for deceased estates
Property sold as part of a deceased estate is often viewed as an opportunity to pick up a bargain buy. But no matter whether you purchase a deceased estate property, or you inherit property from a loved one, it is important to be aware of the potential downsides.
The critical issue can be the title of the property. In some states, property can’t usually be sold if the deceased’s name still appears on the title deeds. The process of changing the name to the surviving spouse or executor of the estate can be time consuming, so this is something to check with your legal rep at an early stage.
A deceased estate property may need repairs, or an extensive makeover, before it can be tenanted. Be sure you have the funds available to complete any work needed to bring the dwelling to the safe and modern standards that tenants expect.
With so many choices of property available, the key is to consider which type of property will allow you to achieve your goals.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment properties by dwelling types
- Chapter Four : Finance for your investment property purchase
- Chapter Five : How to invest in property
- Chapter Six : Adding value to your investment property
- Chapter Seven : Positive and negative gearing
- Chapter Eight : Getting your loan
- Chapter Nine : Selling your investment property