Villas a good compromise of Unit vs House?

[jmillar]

After going to a few open houses in Blacktown I have further considered the question of 'units vs houses'.

Units seem to rent for as much, if not more, than an average house in Blacktown. They are less maintenance, but have (sometimes high) strata costs, not much privacy.

Houses have a greater development potential and offer more privacy but are higher maintenance and cost more. Rental returns are not significantly higher than units, if at all.

Villas seem to have reasonable strata costs, offer more privacy than units, lower maintenance and have a high rental return. They often benefit from a small backyard for animals, entertaining area etc which units don't offer.

For eg this villa in Blacktown - http://www.realestate.com.au/property-villa-nsw-blacktown-113039427

$325,000 for a 3bdr/2bath/1LUG well presented villa which would rent for $380+. You'd struggle to pick up an old 2bdr house for this in Blacktown, and you're looking at around $310k for a 2/2/1 unit with high strata fees and a lower rental return.

Although I think houses can provide great development opportunities and I intend on having some houses in my portfolio down the track, I think villas may be a good compromise and could provide great yields in order to help increase my portfolio size.

Is there anything I'm missing? Any thoughts on villas?

Thanks!

 

[mitchellp]

After going to a few open houses in Blacktown I have further considered the question of 'units vs houses'.

Units seem to rent for as much, if not more, than an average house in Blacktown. They are less maintenance, but have (sometimes high) strata costs, not much privacy.

Houses have a greater development potential and offer more privacy but are higher maintenance and cost more. Rental returns are not significantly higher than units, if at all.

Villas seem to have reasonable strata costs, offer more privacy than units, lower maintenance and have a high rental return. They often benefit from a small backyard for animals, entertaining area etc which units don't offer.

For eg this villa in Blacktown - http://www.realestate.com.au/property-villa-nsw-blacktown-113039427

$325,000 for a 3bdr/2bath/1LUG well presented villa which would rent for $380+. You'd struggle to pick up an old 2bdr house for this in Blacktown, and you're looking at around $310k for a 2/2/1 unit with high strata fees and a lower rental return.

Although I think houses can provide great development opportunities and I intend on having some houses in my portfolio down the track, I think villas may be a good compromise and could provide great yields in order to help increase my portfolio size.

Is there anything I'm missing? Any thoughts on villas?

Thanks!

blacktown is good however entry price is high, have you worked out how much it will cost you per week?


pp 325000
based on a 10% depost loan ammount will be 292.500
interest only loan at 6%
repayments monthly would be 1462.50...17550 py
rent potential per month $1520 19760 py
strata,council water,landlord insurance ect 4150+

based on always being occupied and all going to plan every week youd have to folk out 37.3 or there abouts

 

[DaveM]

Villas are a good option in my book, especialy with a good sized yard (not just a paved postage stamp). You will get the young family lmarket with 1 maybe 2 kids whereas in units they often move once baby #1 starts walking and needing play area.

Good way of keeping land tax down but still having a yard.

Note that one you linked to, backs onto a really nasty housing commission complex, so be wary.

 

[jmillar]

blacktown is good however entry price is high, have you worked out how much it will cost you per week?

I don't consider $300k a high entry price. I think Blacktown is well priced for its location, and has a lot of future growth potential.

I'd rather buy something in Blacktown which is going to cost me $30 a week and will get good CG than something which is neutral and won't get much growth. What's $1,500 a year in the grand scheme of things?

Villas are a good option in my book, especialy with a good sized yard (not just a paved postage stamp). You will get the young family lmarket with 1 maybe 2 kids whereas in units they often move once baby #1 starts walking and needing play area.

Thanks Dave, that's what I was thinking. I would never be able to live in a unit myself as I would feel crammed, yet I wouldn't have time to maintain a house on a large block. I think a lot of people are of the same mindset, and a villa is a nice compromise.

Good way of keeping land tax down but still having a yard.

I hadn't thought of that but certainly a good point, thanks Dave.

Note that one you linked to, backs onto a really nasty housing commission complex, so be wary.

Ahh okay I hadn't done much research just yet but I've seen a couple of units come up here at a reasonable price. Thanks again for the tip - but would you rule it out based just on this? You and I might not live there but tenants might not mind. I would think that there could be some good buys in this complex if the numbers still stack up?

EDIT: Which complex is housing commission? On RPData the only property on the street owned by the Department of Housing is 1/87 Reservoir Rd.

Also, is there some sort of 'map' of housing commission houses out there? I have a list of about thousands of properties on RPData owned by Department of Housing but it may take some time to put it in to a map... Any volunteers?

 

[DaveM]

EDIT: Which complex is housing commission? On RPData the only property on the street owned by the Department of Housing is 1/87 Reservoir Rd.

Behind it, Flushcombe Road/Azalea St/Heliotrope Cres. Street view it.

 

[jmillar]

Wow, that's certainly a nice chunk the Housing Department used to own (5.77Ha)

However, RPData suggests they've since sold some off - eg it appears they no longer own Clare St, Patricia St and Orwell St.

Again, thanks for the tip Dave.