3 bed house or 2 bed apartment?

Hi all...we are looking to buy an IP on a fairly limited budget..sub $300000. We have decided on frankston which aside from its negative image actually seems to have a lot going for it...good schools /public hospital with recent major upgrade/ monash university/tafe/biggest theatre outside of melbourne/plus close to beach with upgraded waterfront facilities and plans for more/east link and peninsula link and only 40 mins to melbourne. Now obviously 300k budget won't get us much so my question is do we buy a 3 bed house on 650sqm land in frankston. North (yes I know it's the "rough" end of town). Or a brand new 2 bed apartment in frankston south? The purchase price and expected rental return are fairly similar for both. I do believe that in the long term frankston north has the potential for some serious capital growth mainly due to its location but I may be waiting a while lol, alternatively frankston south probably has better short term growth ahead of it but surely an apartment won't increase in value as much as a house? I'd be interested in any opinions but please keep the negative comments about frankston to a minimum:)
 
I don't know Melbourne, but they are obviously neighbouring suburbs.
Buy the house!

Now if it was Frankston North vs Melbourne CBD then that would be different
 
I don't know either market personally - but if I was tossing up between a house and unit which were valued the same and in close proximity to one another I'd be going with the house.

You get some land, more scope to add value and no body corps to deal with.

Cheers

Jamie
 
It depends on what you're after -

Just capital growth? I think the house in Frankston North would likely be your best bet.

Cashflow? You'll get a lot more depreciation out of the Frankston South Unit, plus very likely a much higher quality tenant (i.e. steady, consistent cash flow). You will probably get capital growth too, but likely not as much as a house, particularly since it's a new unit. However in Frankston North you may have much more difficulty getting a good tenant, and might struggle more with your cashflow because of that.....having to sell an IP due to cashflow issues and/or bad tenants is the last reason you'd want to have to sell.

Have you looked at historical growth for both Frankston North houses and Frankston South units? That should tell you abit about what the difference in capital growth you're likely to expect. Also, how new is this new unit? Is it off the plan, or have there been a few sales in the building? How many units are in the building, and what's it like location wise within Frankston South?

It always depends :)
 
Houses and apartments can both have some value added through renovation -- paint walls, new floor, kitchen and bathroom -- but only houses can have structural work done to change the asset class by adding bedrooms, living area, carports and garages, etc.

A 2 bed house might be worth $200k, but 3 bedders typically go for a LOT more. You cannot do that with a unit.
 
hey is Frankston Melbourne the equivalent of Mt Druitt in Sydney?

Yes, but nobody spruikes Frankston up like mt druitt

Frankston is going to have a median of a squillion dollars...........soonish..........soon.........now........ Too late!
 
Houses and apartments can both have some value added through renovation -- paint walls, new floor, kitchen and bathroom -- but only houses can have structural work done to change the asset class by adding bedrooms, living area, carports and garages, etc.

A 2 bed house might be worth $200k, but 3 bedders typically go for a LOT more. You cannot do that with a unit.

This. Cant believe no one mentioned it sooner. A house + land is yours to do whatever (within reason) you please. Buying a unit is like having an investment with handcuffs on. Yes, there are exceptions to the rule, but in this case...Go with the house 100% of the time for the infinite percent more flexibility you will have.
 
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