Guide for property investment
Is a townhouse investment property, a good investment in property? Absolutely they can be in. I try to argue with everybody, diversification in your portfolio. So houses, townhouses, maybe even apartments, heaven forbid, if we want to go down that pathway. They all have a purpose. The great advantage with a townhouse is the limited land size. And the bigger the building, therefore more depreciation. So it’s a great tax minimization tool. So the normal way is to look at it. We’ve got a house on a bigger block of land, right? So we’re paying for a larger land component compared to the house. So we can say $200,000 for the land and we’re going to say $220,000 for the standards for your four bed house. You know, nothing elaborate. So that’s a house on land.
How does the townhouse compare? Well you have a smaller block of land. But then that whole block is generally maximized with house. So therefore, the land might only be 100K but in this instance the house may be 200K, because it’s always more expensive building a multistory development. The other thing that’s important about townhouses to take into account, they usually now are newer subdivided with more estates. The cosmopolitan lifestyle. People are attracted to them for the limitations of output they need to do with relation to maintenance compared to this sort of block and system.
The newer suburbs also have more infrastructure around them. So it’s easier to live with the restaurants, the cafes, the supermarkets, the accessibility to parks all in a 1.5, 2 kilometer radius. So therefore people don’t need that yard lifestyle. So there is a niche market that is growing through the simplification of the minimalist lifestyle, so to speak. So what you find is this is great, because the tax savings through depreciation is usually about 130% to a house and land package. So for your tax dollar and bang for buck, townhouses can be a great investment option if that’s your strategy. Tax minimization.