What Is the Better Investment; Flats or Houses?
Property developers and investors are always looking out for which property is best and where they can get the highest return on investment. Do you buy a “Fixer-upper” and turn a cheap house into an expensive house with a team of interior designers and builders? Do you invest in property off-plan? Buying a property before it is built is a risk, but one that can give good returns. Do you invest in flats, condominiums, houses, and then where is the best location?
A discussion about “houses vs. flats” is a popular discussion among everybody who is interested in real estate investing. Typically, one group believes that houses are best to invest in. They are bigger, more versatile, can house families, students, first time renters and long term renters! There is more choice for people looking for a house.
Then there is a second group that argues flats are ideal investments given to its relatively greater returns (lower purchase price) and the fact that the freeholder is responsible for exterior upkeep. A flat is more likely to be in a city, younger couples and smaller families rent flats. It is more likely to have continual tenants because the flat is near people’s work, and better amenities.
Which makes for a better investment, a home or a flat, whether you are thinking about investing in real estate or if you are a landlord? Both have pros and cons.
Are flats a sound investment?
Typically, ground rent or a service fee is required when purchasing a flat. Additionally, there may be expensive maintenance fees. However, flats often offer affordable entry-level costs. In addition, this gives the option to purchase more properties and establish a bigger and more diverse portfolio. Moreover, due to the freehold setup, operational costs are less than for a house. However, you should also be aware that, unlike with homes, flat ownership entails annual increases in ground rate and service charges.
Are houses an excellent investment?
Obviously, the home market is far larger and more diversified than the flat business, but this does not always make it more profitable or simpler to manage. As a result of attracting families with children and other long-term renters, houses tend to have lower vacancy rates. Yet, as a sole investor, you have complete authority over the property and can adopt smart changes to raise its valuation. Based on past data, housing capital appreciation is also more consistent and may be more rewarding. If you decide to buy a house, you will be responsible for all of the property’s repair and construction expenses, including the insurance fees.
But even so, before buying a property, you should still undergo a complete property examination to determine which investment would suit your interest, your target market and your capability.
