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In This Video:

00:26 What to Buy? Apartment or Houses?
01:08 Negative Experience with Apartments
02:37 Land Ownership

G‘day guys. Nic Griffith. I’m back again. Now if you are interested in property investing, property investment, or property investment strategies or advice. You’ve come to the right place.

So one question I ask a lot of guys is what to buy, apartments or houses?

And there are some pros and cons with each we have the time to list them all today. One thing I will say, is it there’s no such thing as a risk free investment but what we can do is identify potential risks and mitigate those along the way, whilst understanding all the market forces that are going to affect our investment both negatively and positively. This includes what to buy.

Negative Experience with Apartments

So firstly, Apartments. I’ve had more negative experiences with apartments than positive. I’ll run through some of those now. The four main points of my negative experience with Apartments which is quiet common across the board is firstly buying off the plan can be a bit of a trap. Buying off the plan is when you put down your 10% deposit, they then build your apartment block and then you pay 90% on settlement. The problem with this is that during the construction the market can be affected, the price and the value can be often lower than you originally signed the contract. Additionally, once they’re complete there’s be a whole bunch of other apartments in the market as well, all competing for rent. And what’s it can do? Push prices down. Rent will go down. Values will go down. So potentially you can be left with assets with risk once its complete than you originally signed up and purchase the apartment.

Secondly, is Body Corporate Fees. Guys, Body Corporate Fees can be a real sting to the bottomline. Additionally whenever I look an apartment or something that has a body corporate, or add at least 1% on to my yield to make sure that the property is going to pay for itself. Body Corporates cover all things like your maintenance, your high-speed elevators, your gyms, gardens, that kind of stuff, so something to look out for the Body Corporate.

No Land Ownership with an Apartment

Thirdly, is there is no land ownership with an apartment. Which can be really restrictive when you are trying to make changes or improvements to the property to maintain its value and appeal to current tenants. House. More pros than cons with houses. Firstly, but most of my positive experiences come with building brand new properties. Firstly, you have land ownership. Land ownership is massive with any sort of portfolio, as the prices of land are always going to be going up. Houses appeal to 80% of the market that is young families, middle-income young families, want brand new properties living. That’s attractive for them to rent your brand new property.

Freedom to make changes is big one as well so you can add value to your property additionally maximises depreciation with a brand new property in the first five years helps that property pay for itself.

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