Which would you buy?

Hello,

I'm faced the following decision - whether to buy a house or unit based on the following in Brisbane:

Option 1:
Older basic house on 500m2 within 4kms of city, returns $420pw. Needs cosmetic reno - probably $20k. Price $450,000

Option 2:
Near new 2 brm, 2 bath unit within 4kms of city, returns $550pw. Price: $440,000.

Which would you choose? Yes, the land content is worth more; but very old & basic house needing work (which I'm happy to do), but the unit has excellent depreciation benefits & return is greater. Hmmm...what to do???
 
Depends.

what are your goals, what is th upside, is one under market value over the other?

Whats teh strata like?

have you got lots of houses or units at present and you need to offset?

I dont like the numbers because they are negative geared. But saying that, it isnt the question you asked so il stick to it... But need more info.

if I was starting again, Id do same over as I did do, and buy the house. But depends on many variables.

Goodluck.
 
Have you got cash/borrowable equity to reno the house? Will you be scrapping together the shortfall? It depends on your personal circumstances which one you choose.
 
Hello,

I'm faced the following decision - whether to buy a house or unit based on the following in Brisbane:

Option 1:
Older basic house on 500m2 within 4kms of city, returns $420pw. Needs cosmetic reno - probably $20k. Price $450,000

Option 2:
Near new 2 brm, 2 bath unit within 4kms of city, returns $550pw. Price: $440,000.

Which would you choose? Yes, the land content is worth more; but very old & basic house needing work (which I'm happy to do), but the unit has excellent depreciation benefits & return is greater. Hmmm...what to do???

Hi Highflyer

More details required such as... strata costs, likely reno costs (and will they increase your ROI?) future IP plans. Personal preference also comes into play, as does likely CG and future of rents in each area.
 
Hello,

I'm faced the following decision - whether to buy a house or unit based on the following in Brisbane:

Option 1:
Older basic house on 500m2 within 4kms of city, returns $420pw. Needs cosmetic reno - probably $20k. Price $450,000

Option 2:
Near new 2 brm, 2 bath unit within 4kms of city, returns $550pw. Price: $440,000.

Which would you choose? Yes, the land content is worth more; but very old & basic house needing work (which I'm happy to do), but the unit has excellent depreciation benefits & return is greater. Hmmm...what to do???

It depends on ones chosen strategy.

Its an easy decision once you have a chosen strategy.

From your questions its fairly safe to say that you dont have a chosen strategy and therein lays the reason for your confusion - am I correct??

Its an easy decision for me (as per my chosen CGA Investment Strategy) - the near new 2 bedder wins hands down, but that doesnt help you.

All property will look the same (as you are currently experiencing) if you dont have an investment strategy that dictates ones purchasing criteria. In other words it weeds out the chaff from the hay.

I hope this provides some food for thought.
 
For me

How many beds/baths in the older house

How big is the block of land on the newer house.

The newer house looks like it has a better rental return, less initial investment and no renovation work.

Same distance from CBD (if they are same suburbs then i would go the newer one)
 
There is no doubt, that behind the "investment stratergy" that everyone should develop, is their current position, their short/middle term positions, and their long term positions. To me, one of th ekey elements, is "income". What is my present, and then projected short/middle term and long term "taxable" income. If this is not "high" then perhaps to look at the higher "yield" returning property, and hence needing a "lower contribution" investment, would be more appealling. On the other hand, if I am already in a "high" bracket, then a lower "yield" could be a better fit. Hopefully, the lower yield, will make up with higher capital growth, so no doubt both in the long term will produce similar ROI's. Key the numbers into the program, and see what it says.
Good luck with the decision.
 
As stated you need to view how this question will impact your goals, for me this has been best stated as.

* Begin with the end in mind: (Covey and many others). Much easier to get to a specific destination if you begin with the finish and work backwards to your present destination.

* The Magic Question (Term used by Dale GG): 'Does this (purchase in this case) bring me closer to my goals.

So it's a piece of string question potentially until more information is provided. Having said that I have a bias for the land :)

I would be thinking what is the potential rezoning/upside development potential with that land and also inner city units can have some hefty body corporate fees and issues with sinking funds and building condition etc. Also some appartment complexes in the Brisbane CBD have demonstrated how capital gain can be very different between one building and the next based on their own specifics. There is no reason why the unit couldn't outperform the house depending on the individual characteristics of the deals.
 
A topic of much discussion ... do you purely look at + geared opportunities only ?

The real money in my view is still made via CG !

I have lots of neg properties, I still hold them from the early days. One point I was neg geared $1600pw across portfolio.

Cashflow is king, very important.

I like CG, but if the CF isnt solid I dont buy now days.

All my properties I buy are well under market val and are atleast cf neutral.

I just bought 2 waterfront properties that were 3 years old for $135k and $212k, which were selling new for $300 and $500k. they are renting for $230 and $310pw (with new rent adjustments) so when people say you cant have your cake and eat it too, you can, there are ways to have both.
 
For me the house wins almost every time - esp. here when we are talking same distance from the city. But my strategy is CG so i am looking for the land. As has been mentioned by the rest of these good folk, you need to figure out why you are investing in property. This will make your decision a lot easier.
 
The price of the house seems good for its proximity to the CBD. 4kms is pretty close. Having said that I dont know about prices on the South Side of Brisbane where that would have to be but it still seems cheap.

When I started reading your post I thought it was going to be about a unit closer in vs a house far away. That is a more common conundrum.

I would go the house because you have more options with a house but the others' comments about strategy are important.

Why dont you tell people what your strategy is and then get comments from some of these experts.
 
Hello,

I'm faced the following decision - whether to buy a house or unit based on the following in Brisbane:

Option 1:
Older basic house on 500m2 within 4kms of city, returns $420pw. Needs cosmetic reno - probably $20k. Price $450,000

Option 2:
Near new 2 brm, 2 bath unit within 4kms of city, returns $550pw. Price: $440,000.

Which would you choose? Yes, the land content is worth more; but very old & basic house needing work (which I'm happy to do), but the unit has excellent depreciation benefits & return is greater. Hmmm...what to do???

Option 1...
 
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