The 4 Types of Residential Investment Properties
If you play your cards right, investing in residential real estate comes with many benefits. It’s little wonder why Australians consider real estate one of the most popular assets. For those just starting out, it can be a little overwhelming. Understanding the different types of real estate investments and how they work is the first step you should take if you are serious about investing.
In our latest Hotondo Homes blog, we share the four common types of residential investment properties, and which type might best align with your interests and budget.
Acreage properties
Also known as rural properties, an acreage is at least one acre in size and usually located on the outskirts of town or in a regional location. For those seeking a more laid back lifestyle, an acreage property is very appealing.
Is an acreage property right for you to invest in? Think about:
- The income from the property compared to the value of the property is often low
There may be a lot of maintenance costs involved due to the large land area (e.g. who will mow the lawns and maintain the grounds?)
- There may be significant tax deductions, putting more money in your pocket
- Acreage properties can appreciate, giving you the option to sell when the time is right
Vacant land
Purchasing a block of land with absolutely nothing on it can be a viable investment strategy. As land is always in demand, it appreciates in value over time if it is in a desirable location. You may wish to buy vacant land to build a house on it, or rent it out to farmers for agricultural purposes.
Is vacant land right for you when it comes to investing? Consider:
- Raw land is easy to acquire, unlike buying a home.
- There are next to no costs involved to maintain your vacant block. You won’t need to worry about constantly making repairs. .
- You have the option to buy and hold, lease your land, or even build something on it. .
- You will have fewer tax advantages compared to other residential property investments, as you won’t be able to reap some benefits.
Houses
The most common type of residential investment properties, houses have the potential to bring in sizable profits and continuous cash flow. You’ll make money by collecting rent from tenants or through appreciated value if/when you decide to sell eventually.
Could you invest in a house? Here are some things to think about:</>
- If you find the perfect property in the perfect area, you could net some extra income each month.
- You could make a decent return on your investment if you buy a house, make repairs, and then sell it later on.
- Managing real estate yourself can be time-consuming. From overseeing repairs to collecting rent, it can take up a lot of your time.
Duplexes
Looking to invest in a duplex? Best described as two independent, freestanding homes built on one block of land, these properties often share a common wall. Duplexes are popular residential investment properties because they are eligible to receive the same tax benefits as houses.
If you are considering investing in a duplex, think about:
- Entry level price points are cheaper than a home in the same area due to the reduced land component.
- They typically provide better percentage rental returns than houses.
- If you own both homes on the same block of land, you receive double the income and property appreciation.
- However, owning both homes on the same block of land comes with double the maintenance costs and administration duties.
Ready to purchase a brand new home? Speak to Hotondo Homes
As you can see, there are plenty of ways to get involved in real estate investing. At Hotondo Homes, we can help you achieve your dream homeowner goals with our range of real estate options: duplexes, acreage properties, and house and land packages. The first step to starting your journey is to talk to us. Why not reach out to our friendly team to discuss your preferences? Call us on 1800 677 156 today.
