New Year, New investment. What's better, a house or an apartment?
A new year is here, and that means it’s time to set some new financial goals. 2023 is a great year to purchase a new investment property.
If you’re trying to decide if a house or apartment is a better investment, you’re in the right place. Below, you’ll find the pros and cons of both options so you can make an informed choice.
House Pros and Cons
Investing in a house in 2023 offers some significant advantages and considerable disadvantages.
Pros
The following are some of the top reasons to consider buying a house:
More Indoor Space
In most cases, a house will provide more interior square footage than an apartment. That’s why houses are generally more enticing to people with kids — or people who plan to have kids in the next few years.
More Outdoor Space
Houses typically offer more outdoor space than apartments as well. While an apartment might include a balcony or small patio, many homes have backyards with much more room for kids and pets to run around.
More Flexibility
In general, people who buy houses don’t have to worry about limitations on changes or upgrades made to their property.
For example, you can add extra square footage to the house, update the exterior, replace the appliances with more modern ones, etc., without having to get permission — although, you will need to consider local council and building regulations.
More Privacy
When you buy a house, you don’t have to worry about sharing walls with the people next door — or sharing a floor/ceiling with the people living above or below you. As a result, you have more privacy and don’t have to be as conscientious about disturbing your neighbours.
Easier, Faster Wealth Generation
Investing in houses typically allows you to grow your wealth faster than investing in apartments. The value of a house usually grows faster than an apartment's, meaning you can sell it sooner and get a return on your investment.
If you decide to rent out your house, you can also charge more in monthly rent than you would if you were renting an apartment.
Cons
If you do buy a house, you’ll also have to consider these downsides:
Higher Upfront Costs
The biggest challenge for most people when buying a house is the upfront cost.
A house will almost always be more expensive than an apartment. That means you’ll have to put down a larger deposit and take out a larger loan to purchase a house.
More Maintenance
Because houses are typically larger than apartments, they also tend to require more ongoing maintenance. You also must consider outdoor care, such as mowing the lawn and weeding the garden.
Higher Bills
Utility bills are usually higher for homeowners than for apartment owners. Because the house is larger, it takes more energy to heat and cool it, keep the water turned on, etc.
Apartment Pros and Cons
As is the case with houses, apartments also offer pros and cons for property investors.
Pros
If you choose an apartment instead of a house, you can enjoy these distinct benefits:
Lower Upfront Costs
Apartments are usually more affordable than houses. You won’t have to save up as much for a deposit on an apartment compared to a house, and you’ll be able to take out a smaller loan to invest in one.
Less Maintenance
Smaller spaces often come with lower maintenance costs — and less maintenance altogether.
Apartments also don’t require you to spend time and resources maintaining the lawn and garden. You're all set as long as you keep your balcony or patio clean.
Lower Bills
Like maintenance costs, utility bills are also lower for many apartment owners. Apartments often don’t require as much electricity or have as high water bills as houses, meaning you can spend less on utilities each month.
More Convenient Locations
For those who like to live in the middle of the action, apartments in the city are generally more appealing than houses in the suburbs. When you buy an apartment, you’ll likely have easy access to shopping, restaurants, concert venues, and other attractions you — and potential renters — will enjoy visiting.
More Amenities
Some apartment buildings offer additional amenities, such as gyms, swimming pools, or tennis courts. When you buy an apartment, you’ll have access to these amenities. If you decide to rent out your apartment, you can also use these amenities as a selling point to attract great tenants.
Increased Security
For some people, apartments offer a greater sense of security than houses. People must go through the main door, past a security guard, up an elevator, etc., before getting to an apartment. The same isn’t true for the average house.
Cons
Like houses, apartments also come with potential drawbacks, including the following:
More Rules
Apartments are more strictly regulated than houses. You’re limited on how you can change and upgrade them. You may also have to follow other potentially annoying rules, like limiting the items stored on your balcony.
More Fees
Apartments do come with more amenities, but those amenities come with extra fees. You’ll have to factor those in when calculating your monthly payments.
Less Space
The average apartment provides less interior and exterior space than a house.
If you have a large family, you might feel cramped living in an apartment. You also may not be able to charge as much for rent since you’re offering less space.
Less Privacy
Living in an apartment requires you to share walls, floors, ceilings, etc. You don’t get as much privacy and will have to worry more about disturbing or being disturbed by the neighbours.
Final Thoughts
Houses and apartments both offer benefits and drawbacks as investment properties.
If you’re looking for more space and more earning potential, houses are generally the best choice. If you don’t have enough for a house, though, an apartment can still generate wealth and help you diversify your investment portfolio.
Whether you choose a house or an apartment, we can help you select the perfect investment at Champions in Real Estate. Contact us today to get started.
