The choice between apartments and houses when it comes to purchasing investment real estate in Surfers Paradise comes down to your own personal investment goals, and the type of income you expect to earn from your portfolio. Naturally, these two property types operate in different ways on the market, so this is something worth considering before expanding your portfolio. Here are some of the difference to aid your future investment decisions.
Capital gains versus rental yields
When it comes to buying houses as an investment, the best way to approach this is looking into the long term growth potential. These properties tend to appreciate capital gains much more substantially than units and apartments, especially if you're smart about buying in an up-and-coming suburb. Furthermore, houses can be easily renovated to add value – something that can be difficult for apartment owners.
Things like pools, outdoor entertainment areas and carports can be easily added to a property to help increase the value – contributing to the overall growth of the real estate's capital gains. This isn't to say there is not rental income to be earned from detached homes, but the brunt of an investment home's return will come when you decide to sell it after years of growth.
On the flip side, apartments and units are often better suited to rental yields as the primary source of income. This is where the age old property phrase "location, location, location" comes into play. Often these properties are located in the hearts of metropolitan areas, where people are living and working in the same environment. The demand for accommodation in these spaces is huge, creating a need for continually growing supplies.
Furthermore, due to the generally lower purchasing price of apartments, a common tactic is to purchase multiple units across the area in order to boost the amount of income sources owned by an investor. While their capital gains growth may be minimal, being able to charge higher rents due to location is something to consider when purchasing investment property in places like Surfers Paradise.
Furthermore, keep in mind that as an investor, you're also assuming the role of landlord. Therefore, keeping in mind the amount of time and money you're likely to spend on looking after a property and keeping it in top conditions should be a factor.
For example, apartments can be an easier investment when considered in this light. The spaces are smaller and self contained, where the onus is on the tenant to keep things clean and tidy. The only time you'll be contacted is if something is broken and needs to be fixed, in which case you take care of the problem.
On the other hand, houses require slightly more maintenance – especially if the home is unoccupied. During these down periods, it's up to you to maintain the property's appearance in order to attract potential tenants. Garden work and general fix-ups of the house's exterior can be annoying to take care of yourself, while paying someone to take care of these issues for you can eventually become quite the expense.
Furthermore, you can also hire a property manager to look after your investment properties as well. This could be a great avenue to consider for owners of multiple properties who are unable to focus their attention on the all the necessary problems.
These are just two of the issues that can confront potential investors when it comes to buying real estate in Surfers Paradise. However, getting in touch with a local real estate agent and discussing the best possible routes to take can provide you with some market insight and help you make the right decision.