House or Unit as an IP?

Hi all,
I am looking for an IP in Melbourne and I like to know your oponion on this.
A house in a more affordable suburb which is not very close to CBD or a unit in a better suburb closer to CBD. Which one is your choice?
My budget is limited and when I say a unit in a better suburb closer to CBD, I am not referring to expensive inner suburbs.
Capital gain is my main goal.
Thanks,

 

Which do you estimate would make you the most money?

 

I think a house makes more money but location is also important. That's why I posted my question here to see what are suggestions.

 

What is your budget and what is your maximum annual holding costs? It could determine whether you can hold a house at the first place.

 

Land appreciates in value while a building depreciates in value so land is where its at.

Hard to give an opinion on the info provided but if you go the unit route you may want to consider an older style one with plenty of land.

A 70/30 land/build ratio is a good guide.

If going strata ask for a copy of the last 2 years AGM minutes and financials. This will tell the story on the buildings condition as well as current sinking fund and any special levies for upcoming repairs and maintenanace.

 

Townhouse minimum. But that's just me. I like to own the ground my properties sit on rather than the roof of the person below.

 

Thanks for the comment. 450k and up to 5k out of pocket for annual expences (I expect that the rent and tax return covers the rest).

 

Thanks for advice

 

If strata title then you owe an equal portion of land the whole property sits on.

10 x units/townhouses/apartmemts/villa = 10% share of land it sits on.

 

Percentage wise, some of our greatest capital gains have been from well located units.
Marg

 

Technically correct.

Using your example though I don't think the other 9 owners would agree with me doing a knock down rebuild if and when the fancy takes me. So that's why I like to own 100% property footprint.

 

I hear ya on that one.

As land is the appreciating asset, not the building itself its still an important consideration when buying strata properties, land to building footprint ratio that is.

 

Units will lower your land tax exposure.

I would not buy a unit in an area where buyers look mainly for 3 bed homes on 600m.

 

Thanks for sharing your thoughts, what if the budget is limited and the view is long term?

 

Units can do well, and like houses, need to be selected, neither will automatically do well or poorly.

Land tax is a yearly tax once over a threshold & in places like Sydney, it does not take much to be over, so apartments or townhouses could provide good capital growth all while lowering your land tax exposure and cash outgoings.

Also, with units can have other advantages for LL, such as more eyes on the property, maintenance should be less of a potential problem (or lack of it rather) and costs are shared, things like the garden and trees etc should, in theory, be in check. On teh flip side there always seems to be a problem occupant or two & strata managers with certain owners can focus spending on things not for the benefit of all. If you are remote, you are relying heavily on the PM.

 

My choice is always the house.
Oversupply is an issue for units.
More land content with a house. Land appreciates, buildings depreciate.