Should I buy a unit or a house?
Q: I’m ready to buy my first property, but I’m confused. Should I buy a unit or a house ?
A: Unless the unit, villa, townhouse, apartment (strata) is incredibly unique like it has harbour views, I prefer to buy houses (Torrens). Why….
Lets do a comparison:
John Smith buys a unit (strata)
Steve Brown buys a house (Torrens)
John Smith buys a unit in a block of 10 units. There’s nothing unique about the block of units. If the block of 10 units equates to 10% of land per unit (10 units x 10% land = 100% of land)
Verdict – John Smith controls only 10% of the land.
Steve Brown buys land with a house on it. There’s nothing unique about this property either but he owns 100% of the land.
When a unit, villa, townhouse, apartment or House is built, it depreciates (goes down in value) – just like when you buy a car and drive it off the lot.
Land appreciates (goes up in value) in growth areas. So if building depreciate and land appreciate – why would you choose 10% of the land when you can have 100% of the land.
Also, I buy property to empower myself, not to make me powerless or restricted.
Strata (unit, villa, townhouse, apartments) can be the most frustrating title to have within property investing. What the Strata ‘Body Corporate’ want – they normally get. You are powerless in this situation because you only control 10% of the land/property.
For both scenarios, when the buildings get old, Steve Brown can knock over his house and build a bigger/better one, but John Smith cannot because the whole block would have to be knocked down. John would have an uphill battle trying to convince the other owners + strata that it would be a good idea.
Paul’s Tip – Power goes to the person who controls the land. Will it be you or strata?
Question answered by Paul Giezekamp, director of Property Secrets.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
st kilda west
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out