Buying A Land Vs Unit As An Investment, What Are Pros And Cons

Buying your first home or property is truly an exciting experience. Whether you are looking for land or a unit to invest in, it isn’t an easy decision to make. That’s because venturing into the property market is always perceived as a risk.

Unless… You have an expert like Quarter Acre to guide to buying your first home or land to invest in. That said, when making an investment in the real estate market, first-time buyers and even seasoned real estate investors can struggle to decide whether to invest in land or a unit.

Moreover, real estate requires a sizable investment which plays a role in dictating the expectations of investors, especially about the return on investment (ROI). This argument of investing in a unit or land seems inevitable, so let’s take a closer look at it.

I hope that in this year to come, you make mistakes. If you are making mistakes…you’re Doing Something. “

Is Land A Good Investment?

If you’re on the verge of buying your first investment property in Sydney but within a limited budget, then buying land can be a potential option. This is because raw land is the stepping stone into the property market.

There’s more. Buying a piece of land can be done at a lower price when compared to other alternatives such as houses or units. However, the devil lies in the details as you’ll notice ahead.

Pros Of Investing In Land

If you’re on the verge of buying your first investment property in Sydney but within a limited budget, then buying land can be a potential option. This is because raw land is the stepping stone into the property market.

There’s more. Buying a piece of land can be done at a lower price when compared to other alternatives such as houses or units. However, the devil lies in the details as you’ll notice ahead.

1. Relatively Affordable

Buying land requires less investment cost, which means less burden on your wallet and probably no need to procure loans depending upon your financial situation.

2. Multipurpose

Land can be useful for various purposes. For example, one can build houses or apartments and make a good profit. It’s up to the buyer who has full authority.

3. Continued Value

Land being limited provides you with self-insurance that you will remain in the property market even if the land remains vacant for years.

4. Low Maintenance Cost

The cost required to maintain a piece of land is relatively less compared to a constructed property like a house or unit.

5. Low Depreciation

Unlike other properties, land values always multiply over time, and the chances of depreciation in the reselling value are minimal.

Cons Of Investing In Land

1. No Passive Income

Land doesn’t generate any return income, and its resale value solely depends upon the desirability of its location.

2. Difficult To Finance

It is difficult to get a loan for buying land. Banks usually charge high interest rates on such loans.

3. Taxable Gains

Gains made on selling a piece of land is liable for capital gains tax.

Is Buying A Unit A Good Idea?

There is one famous quote in the real estate market, “A buyer must buy land, and an investor should invest in houses and units”. There’s a key takeaway from this quote.

All things considered, investing in a unit in Australia is known to generate a relatively better return in a shorter duration of time. This basically means that the perceived value of land is more than units. However, units have the potential to grow far more than land.

Pros Of Investing In A Unit

1. Easy On The Pocket

Generally, units are available at lower prices than houses and promise great returns on investments when rented out.

2. Low Maintenance

Units require low maintenance and are generally maintained by strata bodies. This gives exemption to the owner about maintenance and repair.

3. Safe & Secure

Units offer better security. Tenants always look for a safe, secure place; thus, they are more attracted to renting units. And letting out units get easier for the owner.

4. Easy To Sell

Units are easy to trade as compared to lands and houses. Units are always in demand among investors, which itself gives insurance to the owner of investment returns.

Cons Of Investing In A Unit

1. Depreciating Value

The major con of investing in a unit is that it loses its value over time and usage. The depreciation in units is high when compared with properties like houses or land.

2. High Fees

Though the owner does not maintain units, the owner has to pay for their maintenance. The management cost by strata bodies that look after units altogether are often expensive and scale up over time.

3. Less Control

Units come under shared ownership, and the owner doesn’t have full authority over their property. Thus, making changes to the interior often requires permission from the strata body, while changing the exterior look is nearly impossible.

Conclusion

Both unit and land investments have their own pros and cons, and it’s really up to you where you want to invest. If you are looking for regular returns, investing in a unit can be a potential option.

On the other hand, investing in a piece of land may lead to better returns over time. It is important to make such decisions with precision, and with thorough research.

To avoid any losses and maximize your profits, it is advised to seek guidance from experts at reliable organizations like Quarter Acre.