Indeed, you are between the decision to buy a house or an apartment, and you do not know their respective advantages and disadvantages. Some newbies, friends, and family will tell you that it all depends on your needs, but this is not entirely true since if we see it with the eyes of an investor, it is not the same.
One of the main differences between buying a residence and an apartment is that: The houses do not offer us a high return. But their surplus-value increases considerably over time; while the apartments give us better performance, their surplus-value does not have as much appreciation.
It will be better if we go into the subject to explain this in-depth and in the end, you can make the best decision for you. Is that okay with you?
Table of Contents
Invest in a house
Advantages:
Higher long-term capital gains
Houses generally provide more significant long-term equity than apartments since land often appreciates over time. Homes are more tied to land than apartments (which you buy in thin air). However, it is essential to note that this is not always the case. When investing, it is always vital to consider the geographical location and market conditions.
Opportunities to make renovations or subdivisions in your investment
If you are the sole owner of the house, since you control 100% of the property, you can continue to make strategic improvements to increase its value. For example, you can improve your house or subdivide your land through renovations (as long as they get the city council’s approval) without requiring the permission of legal entities or other residents as it is in an apartment tower.
Long-term rentals
Housing can attract reliable tenants, such as families and professional couples, who want to stay in a specific area for long-term living, whether for work, school, and family.
Cons:
Price
Compared to apartments in the same area, the purchase price of a house is usually higher. This can deter purchases for specific buyers (including beginning real estate investors or anyone looking to diversify their investment portfolio).
Higher maintenance and repair costs
When you are the sole owner of the property, maintenance and repair costs are higher than in an apartment tower, where here, the expenses of the common areas are usually divided among the other owners. If you want to contract some insurance or maintenance plan with a company in a house, this expense will go entirely into your pocket.
Invest in an Apartment
Apartments are an attractive option for investors as they are often cheaper than houses. However, there are many elements to regard when buying an apartment.
Advantages:
An accessible option
If you’re looking for housing, apartments can provide an affordable option, especially in high-cost areas of the city. Lower spending can also bring you less risk and more investment options.
Maintenance and repair costs
The most significant advantage of owning an apartment is that everyone in the building or complex shares the cost of maintenance and upkeep in title deeds. Owners’ meetings, also known as legal entities, are public areas that manage and maintain property rights. Paying annual fees and special fees (also called special levies), such as company fees, can make managing your property easier.
However, some expenses cannot be paid through company fees, such as insurance, council fees, maintenance, repairs, and improvements to private property.
Possibility to buy many assets
Depending on your budget, you can buy two apartments for the same price as one house. This can provide you with higher rental income, future flexibility, and lower risk while diversifying your investment portfolio.
Cons:
Maintenance and repairs
You may notice this is mentioned in the pros and cons as both can be considered. While paying ongoing fees eliminate organizing and paying for some unplanned repairs, it can also be a costly constant outlay.
This is especially true if the tower includes other amenities, such as gyms, saunas, tennis courts, and swimming pools. Tennis court construction projects have great popularity in Canada and the States. It’s a great outdoor activity and an excellent way to increase the value of your property.
Lack of control in modifications
Most apartments are part of a homeowners association, so you must get permission from the general assembly if you want to make any changes or renovations. Lack of control will limit restrictions to maximize the use and value of the property.
Conclusion
When buying a house or an apartment, there are many things to consider concerning real estate investments. First of all, residences offer us more significant capital gain but a low return as a percentage of the total value of the property when buying it.
While the apartments are more accessible since they cost less, it is easier to buy one in areas of high housing demand. However, they offer low capital gains over time since they do not have much land, but they give better rents in house comparison, making it excellent if you require a constant flow of capital to your pocket.
Also Read: Tips To Increase The Resale Value Of Your Apartment.