Liverpool Units vs Liverpool Houses?

[TEG]

I am researching an IP purchase in Liverpool NSW, and I can't decide which is a better investment, units or houses.. (my investment strategy is buy and hold)

From API June 2009 issue :

Liverpool (houses) : Median $315, 10 yr growth 7.0%, Gross Yield 5.3%
Liverpool (units) : Median $205, 10 yr growth 7.3%, Gross Yield 6.3%

Based on above figures, units have lower median price (quicker to save deposit), higher 10yr growth, and higher yield... so why would anyone prefer houses over units?

Looking at the figures alone, it is clear to me that units are the superior investment.

Are these the main figures I should be looking at when assessing whether a unit is a better investment than a house.

Also, can I expect the growth over the next 10 years to be similar to the past 10 yr growth?

I am a newbie investor and always thought I needed to have houses in my property portfolio, but units just seem like a better option. Are there any investors on this forum that only have units in their portfolio, or is a mix of units and houses the way to go ?

Thanks.

 

[luvvit]

Teg,

Theres no right or wrong answer and as such no right or wrong investment. As the saying goes, horses for courses.

My 2c worth for what its worth, with houses you can usually value add, cheaply. For example, buying a run down house nice and cheap, give it a refurb kitchen, and a general spruce up and you can increase the value of the property, very quickly. Harder to do for units. Instant equity is always nice.

Also, if enough land comes with the house, then you may at some point in your buy and hold strategy, develop the property and put more dwellings on it.

Land tax is a consideration with a houses portfolio.

Sh#!!y strata is a consideration with a unit based portfolio.

so in my opinion, no right or wrong answer to your question. Just do your Due diligence and if the numbers stack up, house or unit, then I'd buy.

 

[TEG]

Thanks for the reply luvvit.

I think you are right with the value add and possible subvidision on large block of land.

Looking back at my post I think I was paying too much importance to the stats (growth , and yield) in API mag without realising that these are just numbers, and that if I can get a really good deal on a house (or unit), and value-add , etc, then my numbers (growth and yield) wil probably be much better than the 'average' stats published in the back of API mag..

I guess it really comes down to the deal. If it's a sweet deal, and the numbers stack up, then the decision between houses or units shouldn't really be that important, given a buy and hold (and never sell) strategy.

The only reason I am swaying to units at this time is the lowest cost of entry (smaller deposit) needed, and there is also possibility to value-add by doing a cosmetic reno or a rundown (say, 30 yr old unit).

 

[luvvit]

Thanks for the reply luvvit.

I think you are right with the value add and possible subvidision on large block of land.

Looking back at my post I think I was paying too much importance to the stats (growth , and yield) in API mag without realising that these are just numbers, and that if I can get a really good deal on a house (or unit), and value-add , etc, then my numbers (growth and yield) wil probably be much better than the 'average' stats published in the back of API mag..

I guess it really comes down to the deal. If it's a sweet deal, and the numbers stack up, then the decision between houses or units shouldn't really be that important, given a buy and hold (and never sell) strategy.

The only reason I am swaying to units at this time is the lowest cost of entry (smaller deposit) needed, and there is also possibility to value-add by doing a cosmetic reno or a rundown (say, 30 yr old unit).

Absolutely True
One thing to consider though TEG, there are now a lot and I mean a LOT of units at Liverpool now.... lots of newies and for a while there developers were having trouble getting rid of them and I noticed a few of them as developers sell off's......

So a nice big parcel of land, especially with development potential, may work out better for your strategy in the long run... dunno, just adding fuel to the fire I suppose...

Luvvit.

 

[handyandy]

When you get enough units they also will have a land tax applied. Just because they are not directly attached to land means nothing to the state government The land tax is worked out on the total land that the block is built on divided by all the units. Also this land has a higher unimproved value.

The other expense that you have with units and not with houses is strata fees. Be it that the strata pays for insurance which you would arrange yourself with a house BC's still have the capacity to spend a hell of a lot more that you could ever.

Cheers