Listening to some “Property Experts” it would seem stand alone residential property is the only type of property worth purchasing and residential investment units are a guaranteed money loser. Not surprisingly, these experts are often “associated” with house and land packages, many of which are located in dubious outer suburb locations, requiring a packed lunch to get to!
I personally don’t agree with these “experts”. Following are 10 reasons I think residential units make a great investment and should be considered as a part of every investor’s property portfolio.
The 10 Reasons are….
1. Residential Units allow you to purchase in favourable locations that you may not be able to afford if you purchased residential housing, either as an owner occupier or an investor. They are great for providing diversity into a property portfolio.
2. Residential Units quite often offer a cheaper entry point than housing which means that you can enter the property market earlier than if you purchase residential housing.
3. Lower entry price means less debt which means more free cash to enjoy your life. Life’s way too short to be shackled by debt!
4. A well constructed and maintained complex can often result in lower maintenance costs. Usually the complex has an outside contractor or perhaps an on-site manager who’s responsible for the upkeep of the lawns and the common areas.
5. For an owner occupier, a correctly structured loan facility will allow you to retain the unit when and if you decide to transition into a house, while maintaining your maximum tax deductions. This provides an excellent launching pad into building your property portfolio. Contact us if you would like to know how to achieve this!!
6. Residential Units are usually easier to let, particularly if they are well located and maintained.
7. Residential Units provide you with more letting options. They can be let on a long term, midterm or short term (holiday) basis. Now residential housing also offers the same options, however the number of residential properties that are suitable for multipurpose letting are very limited.
8. They offer similar capital allowance and depreciation deductions that are offered by stand alone housing, plus you can also benefit from the depreciation of the common property.
9. Residential units also offer a greater range of options to cater for different markets. They start at the Studio level and range right through to the mega penthouses (you’ve got to have goals)!
10. They can offer facilities that you may not be able to afford in a similar priced residential property such as Pools, Spa’s, Sauna’s, Tennis Courts, Gyms and even Movie Rooms.
Ok..I’ve provided the 10 reasons why I think units are definitely worth considering, however before you run out to purchase one, it’s important to know that all units are not the same and you should do your Due Diligence prior to purchasing. I’ll cover these issues in a future blog, so stay tuned!
(Now don’t get me wrong, I also think well chosen stand alone housing also makes an excellent investment and should be an essential part of “diversified” property portfolio. This topic will be addressed in the near future)
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Article by Shayne Fergus, Director of Capital Funding Group
To read more on Shayne Fergus please click here
