Investment - Schofields/Rouse Hill/Tallawong - Unit vs House

Hi all,

This will be our first IP. Being mostly a passive investor, I'm looking to start simple. Our original plan was to find a good lot to build a duplex. However, it seems that land prices have rocketed. Builders in the area are quite busy and there is quite a competition for good lots, duplex capable.
Our fall-back plan was a house+land package. However, prices are also quite high (1.2M ~ 1.6M).

We are now considering Proximity Rouse Hill apartments. They are high-end and the location is prime (Welcome to Proximity, Rouse Hill. Apartments for sale. Sydney). We can get a 2-bed unit for <700K, settlement to happen late 2022. We are even considering getting into Tallawong Village, in addition to that (a little more expensive, settlement to be 2023).

My understanding, compared to a house investment (posting here so you can correct me or advise):
- Pros: higher yield. Prime location (Hills Shire Council) and high-end facilities that should attract dependable tenants (e.g. young professionals). Near the (to be completed) Rouse Hill Hospital.
- Cons: lower long term growth. Higher competition in rental prices (e.g. if most investors in the area don't care about a positive cash flow and rent low, that's a bad context).

In terms of finances: we are quite fortunate and got substantial (lucky) returns in the stock market. I want to cash out to (a) diversificate and (b) start with IP.

 

If you are comparing units to houses then what you have outlined is relatively sound. As a general rule of thumb, I would prefer to purchase a house over a unit. However, this comes with a higher purchase price and does depend on numerous other variables (investors' goals, location of purchase, the demand for each property, etc).

Another consideration is whether you should buy brand new vs established. There are many opinions on this depending on the experience of an investor. If you are a passive investor like you mentioned I am assuming you are looking to employ a buy and hold strategy. In which case, typically established property will outperform new property as for the same price you can purchase in a better location with greater demand (this drives capital growth). Moreover, new property tends to be in new estates where they can easily become over-supplied. This is not to say you can't make money by buying something new but this usually requires a more active and calculated approach.

Have you considered purchasing inter-state? Many investors limit themselves to their own backyard, this can be convenient and you may know the area well but will it provide you with the best return for your investment? For example, a 700k budget would enable you to purchase a high-demand established house in Brisbane, Adelaide, or Perth.

I would suggest you first identify what your goal is, reverse engineer a plan, and then determine what assets will enable you to achieve your goal. This may give you greater clarity around what is best for your situation and circumstances. I hope this helps.

 

Hi @Branden , thanks for the detailed response.

Yes, my strategy will be a buy+hold, long term.

> Have you considered purchasing inter-state?

Not inter-state, but open to anywhere in NSW. A friend recommended a house+land package on Gosford (as an alternative to a unit in Rouse Hill). However, I haven't fully researched this, yet,

 

You may want to consider spending some time researching which asset may provide you with the best return for your goals. Using a buy and hold strategy I believe there would be greater alternatives to an H&L package up the coast. For new investors purchasing inter-state can be quite daunting, however, it widens your buying opportunities immensely and allows you to purchase in markets that are primed for growth in the short term.