Hi Guys,
Just a question on villa unit, i understand that a villa unit is an semi-detached house, and you don't own the common area such as stairwells, driveways and gardens. but my question is do I own the land where the property is standing on ? somebody told me that the land is under my name but i don't actually own it? what's the difference between land under my name and owning it ??
Also, compare to apartments , what's the adv and disadv of a villa unit? does villa unit have a higher capital growth potential than apartments in general ? or the opposite applies?
Comments welcome, many thanks.
You own a percentage of the land that the complex is built on, and the building on that land.
The lot size of your land will be on the title.
There is no general pattern which says a villa unit or an apartment or a house are better investments.
For example; we own both a 3 x 1 house on a separate block of land, and a 2 x 1 villa unit in a complex of 4 in Kalgoorlie. The unit has a courtyard.
They were bought about 2 months apart back in 2003. The unit was $105k, the house was $151k.
At the last Bank valuation in Nov last year, they were valued at:
unit - $220k
house - $300k.
Much the same; slightly better for the unit, but it is in a better spot than the house.
As a parallel; our PPoR was purchased in 2000 for $305k, and was valued at the same time (Nov) as these two mentioned for $650k. The PPoR is on a 1/3rd of an acre with terrific bayviews.
So, which was the best investment out of these 3 particular properties over that period?
Basically no difference, but the PPoR with the bayviews has the bigger potential.
The disadvantage of a villa unit or apartment is the Body Corp fees.
We have 2 villa units - both with body corp, so this is a "con". It's a tax deductible expense, but still an expense
.
The "pro" is that they are generally cheap to buy, the rent returns are usually not too bad, and if you buy in smaller complexes - less than say 12, they do well for cap gain.
This is good for the newbies, and I would recommend these as a first up investment, and make sure it is built after 1987 to maximise the depreciation for the tax return.
I would not buy any more of these now as we have "moved up the ladder" a little bit, but our villas have served us very well, and provided us with the opportunity to move up.
If you can afford to spend a little more, a house on a good sized block of land with future subdivision prospects is better as you can increase your return down the track, but the rental yield may not be as good, so the holding costs until you can realise that increase in returns may be harder to cope with.
I think this is a "higher up the ladder" step for most, and something to plan towards.