The three best types of investment properties
Updated: May 25, 2022
Interested in making property investment your means of wealth creation, but unsure on what's going to be the best type of investment property?
Well, we're here to help! As experts in the property investment space, we're going to share the most common types of residential investment properties that we're assisting our investor clients with.
In this article we'll be exploring the types of rental properties and how well suited they are to different strategies. We explored these strategies in our previous blog that you can access here.
At Real Estate Investment Finance we only deal with properties that are full turnkey. Such investment properties that we primarily assist our clients with are; house and land packages, townhouses, and apartments.
We'll be analysing each of these types of rental properties to help you decide what is more suitable for your real esate investment strategy. As a disclaimer - we must note that there is no one property type that's better than another. It all depends on your circumstanes and what you want to achieve as a property investor.
Investment property type 1: House and land packages
At REIF we find that NEW house and land packages make great rental properties. We only work with builders that offer full turnkey packages. Full turn key packages have all the essentials (stoves, dishwashers, lawns, fencing, etc.) included in the build cost.
There are numerous reasons why we choose new real estate investments. Primarily being that they're better in the long-run, due to low maintenance, improved tax implications and the pure fact being that they work better with adding more money back into your pocket!
Pro's of buying a house and land package
As opposed to established, there are great benefits to investing in new house and land packages. A few being:
Low maintenance and therefore lower costs in property upkeep
The ability to design your rental property to suit it's investment needs
Land is ever-increasing in value. So, if the house depreciates over-time, the land will generally appreciate in value
Tax refunds. As the property depreciates you can claim this as a cost at tax time
Con's of buying a house and land package
There aren't many negatives associated with buying house and land packages. Though, the few downfalls that you may wish to consider are:
Sometimes it costs a little more, compared to established house and land packages
Servicing your loan throughout the construction process of building the property
Investment property type 2: Townhouses
Townhouses are a great investment. Once again, we only offer full turnkey townhouses to our clients. Refer to the below for pro's and con's of this investment property type.
Pro's of townhouses
They offer a greater sense of community for prospective tenants and residents
Often more affordable and can produce higher yields if your real estate investment strategy is to generate more money to pocket each week after costs
Most usually have common area amenities for residents to use
Generally bigger in size compared to an apartment
Con's of townhouses
Lower potential for capital growth due to lack of land
Reduced space which sometimes means less privacy
Strata fee's/body corporate fees
Investment property type 3: Apartments
Apartments are a great market for investors to chip into. They're one of the best rental property types due to their practicality for tenants, especially in built-up city regions. If you're thinking about buying an investment property that's an apartment, consider some of the pro's and con's.
Pro's of apartments
Location and convenience
Appealing for those seeking an urban lifestyle, particularly within the inner-city
Can produce higher yields as they generate more profit after costs
Common areas for building complex to use
Con's of apartments
Reduced potential for capital growth due to lack of land
Reduced space which can mean less privacy
Strata fee's/body corporate fees
Ready to find the right property for your property investment goals?
Want to take that next step as a property investor? If you think that you know what your strategy is for wealth creation, reach out for a free consultation with a REIF Investment Strategist. We will be able to help you map out your goals and assist you with finding the best investment properties to align with your circumstances.
For a free no-obligation consultation, reach out to us on the details below.
Ph: 1300 130 932
We explore this topic in our eBook 'Building Wealth Through Property.' Check it out here for FREE!