What type of property is good for investment?

Investing in apartments and units

Some general advantages: 

• High demand city/beach living can offer higher rental yields than a house in an undesirable location   
• Lower price point  
• Lower council rates  
• Lower utility bills as there’s less space to heat/cool  
• Strata arranges the maintenance for you   
• Can be more secure against break-ins  
• Can offer lifestyle inclusions like security, gym, pool and lifts.  

Some general considerations: 

•  Strata fees aren’t cheap and tend to fluctuate
• Limited land size means less opportunity to manufacture growth  
• Body corporate personalities can clash  
• Slower capital growth and more suited for income stream  
• Less desirable for families, lower rental yields   
• You share land ownership 
• May need strata permission to renovate (e.g. work affecting waterproofing) 
• If it’s under company title, you're only a shareholder in the building company, with the right to occupy a particular dwelling  
• Due diligence: dig deeper into strata to uncover major renovations and quality of build issues (e.g. AGM minutes could outline plans to take legal action against builder and fix defects but fail to mention the $50k/unit ‘special levy’. Strata manager emails may reveal issues yet to hit the minutes, giving owners a sneaky heads up to sell). 
   

Buying a townhouse for an investment property

Depending on the state or territory, a townhouse normally sits in a row of more than three side-by-side houses that share at least one wall. 
 

Some general advantages:

• Can be a happy medium between houses and units  
• You own the dwelling 
• Less maintenance than a house 
• Reasonable price point, often lower than a house 
• Some are non-strata, others can have lower strata levies than units   
• Those close to schools/public transport can give good growth. 

Some general considerations: 

• Shared land ownership and common property with other owners in the complex 
• More maintenance than an apartment 
  
• Potential disagreements over common property 
  
• Some have strata titles and body corporate fees 
  
• Limited land size means less opportunity to manufacture growth 
• Some have no body corporate, so you’ll need to come to agreements with neighbours about shared spaces 
• Knock down, building and reno restrictions.
   

Investing in a house & land package

Some general advantages:  

• Lower initial builder’s deposit, with the balance payable at settlement – usually when construction’s completed 
• The build is in warranty
• Price lock: high growth could mean your sale price is lower than its completion value
• Potential to claim depreciation expense as deduction against rental income: talk with your tax adviser
• Government Grants, such as: New Home, First Home Owner.

Some general considerations: 

• Financial return reduces once the developer and marketeer take their cut 
• Lots can be on the small size 
• Completion delays 
• Research builder and build quality 
• Supporting infrastructure (schools, shops, transport) may be delayed  
• May not include landscaping, fencing etc  
• Little control over neighbour’s new build  
• Compare rent with similar properties on other street sections 
• Value may not rise if in a population growth corridor with continual new builds in the surrounding area 
• Have a lawyer/conveyancer check the contract before signing (e.g. builder’s price lock might expire if the build takes longer than expected, what happens if your builder goes bust) 
• Talk with your lender first: value could fall lower than the price you’ll pay on completion, impacting your LVR⁺. 
   

Investing in land

Some general advantages: 

• You own the land 
• Market value can increase (capital growth strategy) 
• Lower price point could allow for water views or a larger lot  
• Lower costs, like stamp duty and insurance  
• Less maintenance  
• Investment option for parents buying for their kids   
• Buy now, build later 
• Can be cheaper to build rather than buy established property   
• Potential to generate more monthly income through subdivision, adding studios or tiny house 
• If area is re-zoned later, value could rise  
• Less competition to buy  

Some general considerations: 

• We may not lend against certain ‘speculative investment’ parcels of land – check with your lender 
• No rental income or cash flow until a property is built   
• If area is re-zoned later, value could fall  
• Depending on the state or territory, extra costs can include public liability insurance, annual land tax and fencing  
• Consider an independent valuation and surveyor's report 
• Check it’s not on wetlands, in a flood or fire zone, if the land absorbs water 
• Council building approvals may require reports on waste management, wastewater design, native vegetation and bushfire clearing 
• Ask neighbours if they’d buy the property, and if they know anything about it  
• Your conveyancer can check the title to ensure nothing else is owed  
• Regional and rural land may not be near services like electricity, sewerage, town water, Wi-Fi and hospitals  
• The more remote the block, the fewer your potential buyers
• Vacant Land has specific tax treatment: talk with your tax adviser or visit the ATO land page. 
   

States and territories tend to have their own property type and land title system, so check with your local council or a town planner.

• Duplex. A single building with two separate dwelling entrances, often with a shared wall. They may need building insurance covering both homes. And can be on a single Torrens title, or two that allow each to be owned and sold separately. 

• Villa. Like townhouses, they’re generally strata titled with body corporate fees. 

• Terrace. Older buildings are on Torrens title, like a house, while others can be on a strata title. 

Defence Housing 

You may be able to purchase or build a quality rental property to lease to the DHA if it’s within 30kms of a Defence location. 

NDIS housing

You could consider buying property as part of the National Disability Insurance Scheme, with a minimum.

Commercial investment properties

Purchasing property under a company name? A Westpac business Property Specialist can walk you through your investment plans.