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Investment Property: Does Size Matter?

When deciding on what property you’ll invest in, one of the first things to consider is the size. Which is better – a home that is perfect for families or an apartment? There is no right or wrong answer here as there are different factors that come into play.

Do not forget that the type and size of property that you will purchase greatly affects your capital growth and the rental profit you’ll get. That’s why it is highly important that you take time to thoroughly evaluate your options. Know more about the people who live in the neighborhood and the lifestyle they have – if they are mostly young professionals, families with children, and more.

Both small condos or apartments and big houses have their own pros and cons. Here are some of them:

Pros of Small Condos and Apartments

Smaller properties are generally less expensive than bigger homes. Because of their smaller size, they often require less maintenance as well. And even in the event that they need major repairs, they are often paid by all the owners in the complex. You wouldn’t have to worry about land tax bills or if you need to, they wouldn’t be that big.

Smaller properties like condominiums and apartments are often located in areas where businesses are thriving. They are almost always close to entertainment venues and retail establishments Public transportation is available at all times.

Cons of Small Condos and Apartments

Just as there are advantages, there are also some disadvantages to choosing smaller properties like apartments and condos. For one, your investment does not include land. Even if there would be less maintenance required, you would have to pay for repairs should the need arise. Usually, there are owner or membership fees (that can be quite substantial) that you have to pay. These are used for the maintenance and repair of the complex.

Pros of Houses

When you purchase a house, it includes the land which increases its value. There is a greater likelihood of growth for your capital. Bigger rental properties also fetch a higher rent. They are also more appealing to most people, whether they are single occupants or big families. Because you don’t have to comply to association rules and regulations (which most condos and apartment complexes implement), you can do whatever changes you want to do with the property. You can repaint, renovate, or completely knock it down to build a new house!

Cons of Houses

If you are going for a larger property, that means you have to prepare a bigger upfront payment. As the sole owner of the house, you are the one liable for all maintenance work and repairs needed. Because your investment comes with land, you would have to pay land tax.

So… does size matter? It does, depending on your needs and capabilities as well. The decision needs careful consideration as it should be in line with your goals as an investor. Do not rush into purchasing the first available property you see and make sure that the size of the property you are buying is the right one for you.