Which investment is best?

[tone1]

Which of these would you buy, assuming that the purchase price of both are in a similar range and both with excellent public transport/road links:

(a) a subdivided period home in a great location & expensive suburb (300m2, unit at rear sharing no common land) which has been renovated in the early 2000s, has strong capital gain potential if another update is made, and a decent 4% or so yield in its current state; or
(b) a period home on a large block is a less desirable suburb showing signs of growth (600m2 or so), lower rental yield (low 3%'s), potential to build unit at back, existing home needing major renovations.

(a) is appealing to me as the house can be rented as-is for a good yield and the reno's required are not particularly huge. (b) appeals because of the development potential, but less appealing because of the major reno work needed, the upfront costs of the reno and building at the rear, and lower yield in the meantime. At this stage, (a) is likely to sell for less than (b) as well.

Sorry if the answer is obvious...

 

[antistar]

If you are thinking long term go for more land, but not sure what 'less desirable suburb' means exactly. If the 600sqm lot has 'excellent public transport/road links' and room to improve / subdivide then go for (b).

Hard to tell with only the few details shared here - just some thoughts that may help. Cheers

 

[Deltaberry]

Without knowing exactly what suburbs you're looking at, I'd go option a.

Good location, good position is unbeatable. In a boom, they run a lot faster than the average less desirable suburb.

 

[eeew]

Without knowing exactly what suburbs you're looking at, I'd go option a.

Good location, good position is unbeatable. In a boom, they run a lot faster than the average less desirable suburb.

Agreed with this. In the long run, location comes out on top; even if the location has less land compared to the other options.