A collage of four different types of real estate

What Kind of Real Estate Makes the Best Investment Property?

No matter who we are or what we do, most people want their money to work harder and smarter for them. When it comes to income, the dream is that it can generate itself. Not everyone wins the lottery though, so for most of us this dream is achieved through investing.

Many people turn to property to generate some extra funds, and this is undoubtedly one of the smarter choices. It’s not without its risks though, which is why people examine location and demographics, supply and demand, quality, amenities, and more. When we look at these qualities we ultimately overlook one thing though. What type of real estate should we be looking for?

Existing Homes or Units

We don’t often think of real estate in terms of “new” and “second hand”, but this is the case and it does affect your investment. Buying an existing property has its advantages and many of them are literally right in front of you. With these properties you can research their past performance and see their existing amenities. You know what you’re getting as well as where you’re getting it. In many cases, these properties also have heritage appeal that you can benefit from when it comes to resale or renting.

Of course, older houses and units are likely to need more maintenance that can affect your bottom line in the longer term.

New Homes and Off-the-Plan

The other side of the argument is obviously new homes. The allure of new real estate is fantastic for renting and can also come with depreciation benefits for the buyer. When you’re buying these packages, look out for where else the seller is promoting properties. Too many similar properties nearby can dilute both your rental and resale potential.

Then there is off-the-plan investments, where you buy land that is yet to be developed. This usually comes cheaper and often at times you can determine property value from the land itself. Just make sure you do your research into the developer and see as much information about the property being built as possible.

Serviced Apartments

For visiting guests, serviced apartments provide a home away from home and for investors there are benefits too. Buying serviced apartments with bigger companies will mean there is little to no need to worry about vacancy, management and leasing fees. You can usually also enjoy a longer-term lease. As they typically play host to travelling businesspeople and tourists, serviced apartments are more dependent on location – which you can control – and the economy, which you can’t.

Subdivided Property

A property that has been subdivided is one that has two or more dwellings on the one piece of land. This “dual key” solution allows you to generate more money from just a single piece of land but just consider your endgame. When you eventually want to sell, subdivided properties tend to have divided and reduced interest.

The Verdict

With each type of property having its advantages and disadvantages, it’s always best to purchase a property that suits your personal and financial situation. Generally speaking, it’s best to choose something that you can benefit from through rent, appreciation, tax benefits and eventual resale.

 For more specific advice, contact the property and financial experts at Astute Investments. You can call 07 5530 8407 to organise a more formal chat, where we can offer you advice, mentoring and more.  Find out more about how we can help or contact us today.