Holding Costs: Unit v House

My wife and I are looking to buy our first IP in Sydney for $350K or less but can't decide between a house around the Quakers Hill area or a unit around Rockdale.

Given the following assumptions, would you expect there to be much difference in the holding costs of each?

Assumptions:
- We are planning to do a straight long term buy and hold
- Both properties are around 10 years old and in good condition
- The Strata fees for the unit are around $500 per quarter
- The sinking fund for the block of units is healthy.

Many thanks,
Dave
 
consider weather u will be inccuring OSR land tax, that will help aswell... as say apples for apples.

e.g.

lets say a house in quakers for $200,000 so land content is $3200 in Land tax.
quakers hill unit (dont exsist but will make it up) say the unit is on a block of land double the house, yet there are 10 units on it therefore $400,000 land content / 10 units = 40k OSR on that unit would be $650ish pa.

so where u pay in strata you save in land tax.

futhermore strata includes building insurance (saving) + no yard work/ minimised building work too.

Units aint all that bad but need to work out all the figures as everyones circumstances are different. There are many different factors which should all be considered.

for me I think they much of muchness.
 
If the unit doesn't have individual water meters, you will be up for the water useage as well.

The holding costs in this case will be probably more for a unit than a house when you factor in Body Corp, Water and Council rates and water useage.

Mind you; with units you save on Building Insurance - it's in the Body Corp costs usually, whereas with a house this is your cost.

It'll depend on the rent yield as well.

You also have a higher depreciation with the house usually, as the house is usually bigger and cost more to build.

We bought a few units in the early days because that was all the budgets would permit - stuff in the low $100k's, but the rent yields were very good to start with.

If you could buy a decent house on a parcel of land that is big enough for a future sub-div - for about the same price as the unit, I'd be going for the house.

Just make sure the rental demand for houses is strong in the area - no good if everyone wants studios with high speed internet and near the cafes, and you've got the "Mr and Mrs Average family with a dog" type of property.
 
Thanks, for the info

consider weather u will be inccuring OSR land tax, that will help aswell... as say apples for apples.

Since this is our first IP we won't be over the land tax threshold until we buy more property or get some serious appreciation, but given that our intention is to hold long term it is definitely worth serious consideration.

If you could buy a decent house on a parcel of land that is big enough for a future sub-div - for about the same price as the unit, I'd be going for the house.

Thanks for that suggestion BayView. I am seeing plenty of nice houses on largish blocks in Quakers Hill (600-800sqm). The problem is they are not corner blocks and as far as I know Blacktown Council will only allow subdivision in three circumstances:

1. A corner block >600sqm or
2. A block >900sqm with >24m frontage
3. A block >1100sqm with >15.5m frontage (battle axe subdivision)

Do you think there is any point going for one of these 600-800sqm non-corner blocks?

Given that our strategy is to hold the property long term is it still worth developing a block like this into dual occupancy even if we are not able to subdivide it?
 
Thanks for that suggestion BayView. I am seeing plenty of nice houses on largish blocks in Quakers Hill (600-800sqm). The problem is they are not corner blocks and as far as I know Blacktown Council will only allow subdivision in three circumstances:

1. A corner block >600sqm or
2. A block >900sqm with >24m frontage
3. A block >1100sqm with >15.5m frontage (battle axe subdivision)

Do you think there is any point going for one of these 600-800sqm non-corner blocks?

Given that our strategy is to hold the property long term is it still worth developing a block like this into dual occupancy even if we are not able to subdivide it?

It may be a bit of an "educated gamble" to go for the blocks that aren't on corners.

Councils change their zoning laws from time to time, and if the area is likely to continue to be under pressure for housing, they may adjust their policy to include non-corner blocks.

Otherwise, stay safe and go for the corner ones, or the Option 2 blocks. You may have to pay a bit of a premium to get one, but the long term gain would probably be worth the extra cost?
 
Top