My preferred property type for investment purposes
I am often asked what type of residential properties I focus on when I look to invest. The answer for me has been the same since I started investing in property – sectional title townhouses. So why do I focus on this property type? There are a couple of reasons.
Firstly, they are more affordable than free hold properties but yet are able to generate rental income close to or more than freehold properties, particularly if they offer good security. This means higher returns. Secondly, they are easy to maintain as the body corporate and property managers take care of most of the exterior issues affecting the property, paid for out of the monthly body corporate fees. This makes management of the property easier in the long run and also makes budgeting easier. But, most importantly, if I ever decide to sell I know that the product is perfectly placed and affordable for both first time buyers, and older people looking to downsize.
The most recent data statistics from Lightstone property show an interesting trend for 2018. Unlike years past where freehold properties have grown more in capital value than sectional title properties, 2018 is showing a reversal of the norm and sectional title properties are now growing more in value than freehold properties. I think there are two main drivers of this change. More and more people are looking to downsize from large freehold properties to townhouses and apartments for the perceived increase in security that the sectional title schemes offer.
But there is also an upwardly mobile 20/30 something year old buying sector that have a different outlook on life and don’t necessarily aspire to the big car, big house mentally that their parents and grandparents aspired to. Millennials and 30 year olds tend to steer away from heavy financial burdens and anything that ties them down. This new breed of buyer is looking for affordable, lock up and go type living and townhouses cater perfectly for their needs even when they do settle down and have children.
Happy investing!
~ Jason Lee
Firstly, they are more affordable than free hold properties but yet are able to generate rental income close to or more than freehold properties, particularly if they offer good security. This means higher returns. Secondly, they are easy to maintain as the body corporate and property managers take care of most of the exterior issues affecting the property, paid for out of the monthly body corporate fees. This makes management of the property easier in the long run and also makes budgeting easier. But, most importantly, if I ever decide to sell I know that the product is perfectly placed and affordable for both first time buyers, and older people looking to downsize.
The most recent data statistics from Lightstone property show an interesting trend for 2018. Unlike years past where freehold properties have grown more in capital value than sectional title properties, 2018 is showing a reversal of the norm and sectional title properties are now growing more in value than freehold properties. I think there are two main drivers of this change. More and more people are looking to downsize from large freehold properties to townhouses and apartments for the perceived increase in security that the sectional title schemes offer.
But there is also an upwardly mobile 20/30 something year old buying sector that have a different outlook on life and don’t necessarily aspire to the big car, big house mentally that their parents and grandparents aspired to. Millennials and 30 year olds tend to steer away from heavy financial burdens and anything that ties them down. This new breed of buyer is looking for affordable, lock up and go type living and townhouses cater perfectly for their needs even when they do settle down and have children.
Happy investing!
~ Jason Lee
