Free real estate investing advice is difficult to come by. Nowadays, people write books which you must buy or start programs you must join in order to get the advice you’re seeking for.
Today, I’ll share with you one of the most common questions new real estate investors ask. Should they invest in a flat/apartment or a house?
This is a very valid question with multiple answers.
Today I will share with you, my tips that have worked for me in the past, when it comes to investing in a flat or a house.
Investing in a flat/apartment
It is important to remember that with this free real estate investing advice, I am not telling you that there is only one way, and that is my way. No, I am giving you tips on methods that have worked for me in the past. It is up to you whether you want to incorporate these methods into your strategy or not.
Each investment strategy has its own pros and cons.
When it comes to deciding what kind of property I am going to buy next, I always tend to go for apartments. There are one or two times I will rather consider buying a house, but the majority of the times, I prefer apartments.
Pros of investing in a flat/apartment:
- The first reason that comes to mind why someone would prefer an apartment rather than a house is the price. Apartment prices are relatively lower than family homes. If you are still new to property investing, then this would be a better option.
- Something that goes hand in hand with the price is qualifying for a bond. Buying an apartment will increase your chances of being qualified.
- If you are planning to lease your property, chances are better that you would get a tenant in a flat than a house. People that decide they want to move into a family home normally has enough money to afford to buy. It is usually the younger generation that decides to live in a flat.
- Apartments have less maintenance than houses. Apartment blocks are usually run by a body corporate which ensures the block gets painted, etc.
- It is better to own a few smaller properties than owning one big property. Buying a flat means you can afford two, for the price of a home.
- It is easier to create the “wow factor”. An apartment is much smaller than a house so it’s easier and cheaper to maintain and impress viewers when your property is being leased.
Cons of investing in a flat/apartment
- Because of the reason that a flat’s rent can be relatively cheap, chances are you could the type of tenant who won’t respect your property and damage it.
- You are limited to the number of additions and alteration you can do.
- The body corporate can implement special levies for which you have not budgeted. This can happen when sudden maintenance work needs to be done or paint work to the apartment block.
- If you buy into a block of flats that has a lot of units, the demand will decrease, meaning you will have to lower your rent in order to get tenants. Always try and buy in smaller blocks.
- Flats are significantly smaller than houses. People that want space, won’t be interested in flats.
- Tenants from the flat above yours could get irritating if you are able to hear footsteps, etc.
Investing in a house
When deciding to invest in a house, rather than a flat or apartment, always make sure you know about the pitfalls.
Real estate investing has a lot of different sections and ways to execute it.
The one thing you should remember, as mentioned above is, whenever people decide to move into a family home, the chances are very good that they will be able to afford to buy the house themselves. It might be better to think about buying a house to flip.
That doesn’t mean, no one rents a house because they do! It might just be more difficult to get a tenant than with a flat, but buying a house for investing purposes also has its up’s.
Pros of investing in a house
- People that prefer to live in a house usually likes their space. You can use that as a selling point for your property. Find a house in a good area with a quality yard and the potential tenants will love it.
- Buying a house will often mean you have a tenant for longer. People that move into a house normally don’t have plans of moving soon. The moving is too much of a hassle.
- You have the possibility of doing additions to your house, increasing the value.
- It is possible to add a flat to your home, which you can also lease. This way you could have two people leasing on one property.
- No sudden body corporate costs would appear. It is just your responsibility to make sure your property is appealing to your potential tenants.
Cons of investing in a house
- More capital needed to start investing in a house. It is also difficult to get qualified for such a big amount by the banks.
- You will be paying higher interest rates.
- A house has a larger are to maintain, meaning higher maintenance costs.
- Together with maintenance goes wear and tear costs. Family homes tend to get a lot more wear and tear because of children. We all know how children like to climb on things and cause mayhem.
- Bigger risk of burglary and damage to your property.
- You might struggle a bit longer to find a tenant if you are planning to lease.
These free real estate investing advice was created for people who can’t decide whether to invest in a flat or a family home.
The tips you find above are the tips that I use to make my decisions. Always remember that each opportunity has its own pros and cons. Maybe you have an excellent opportunity to invest in a family home. If so, go for it!
Overall, I prefer to invest in smaller properties like two bedroom apartments. This way I can buy a lot more property and not have all my eggs in one basket.
I would like to hear what your thoughts are on this topic. Feel free to leave a comment.