Property Types

There are many different types of residential properties. Detailed below is a brief summary of the main advantages and disadvantages to each type

House & Land
Advantages

	Value of the land drives the increase in price for the property
	Affordable in outer suburbs and country areas
	More likelihood of positive cash flow in outer areas and country areas
	Appeals to a larger range of potential tenants, including families

	More land and larger size building to maintain
	Often more than 12km from the CBD, reducing opportunity for significant capital growth
	Low rental yield compared with purchase price because you are purchasing land as well.
	Higher rates compared with flats/apartments/units.

	Initial purchase price is usually lower than home and land
	Less maintenance
	Share cost of maintenance, land tax with other owners
	Purchase price and rental income offer higher yield
	Can buy within 2 to 12km to the CBD, thereby increasing opportunity of strong capital growth

	Body corporate fees
	Limited control of what others in the block are doing
	Lack of personal outdoor space

There are many other property types for investors. These include:

Tourism Property

To qualify as tourism investment, a property will usually offer short term stays, has single key access and offers access to restaurant type facilities. Income is often pooled and then distributed to all apartment owners depending on a predetermined formula usually based on your purchase price.

Retirement Villages

There has been large growth in the development of retirement villages in recent years. Many of these are owned by investors who cater for the rental demand of the over 55’s. With most retirees preferring to stay in the one spot, long term tenancies are the norm in a retirement home.

There is no doubt that the retirement home market is growing, and an area that property investors should consider as a part of their investment portfolio.

Student Accommodation

Over the past 5 years there have been many new student accommodation properties built. Student accommodation is an extremely viable option to include in your property portfolio however it often comes with the warning tag ‘Let the buyer beware’. More research is required if you are considering purchasing this type of property, particularly on the drawbacks like the reliance on international students, the age of the tenants and the style of the property often makes it difficult to lease to the standard market.

There is no real model for specifically built student accommodation with opportunities varying from dormitory style to townhouses with common living areas.

So, which one do I choose?

If you consider only one type of property for your portfolio, you are limiting your opportunities. Diversification in property can assist you, so that you do not put all your eggs in the one basket. Some types of properties will perform better than others in different areas and market situations.

Disclaimer: This information is of the nature of general comment only, and does not constitute professional advice. Readers of this website should obtain professional advice with due regard to their own circumstances before acting.