NOVAK NEWS - HOUSES VS UNITS - WHATS THE SMARTER INVESTMENT ON THE NORTHERN BEACHES?

you start. Good evening everyone and welcome back to Real Talk Weekly. I'm

joined here with my colleague Harry and tonight we are going to uncover the

age-old question of investing on the Northern beaches whether to go with

houses or units station. Good evening, how are you? Good, good, mind how are you?

Great, it's been a cracking day. It was a good morning, a little bit of rain

this afternoon but never let the rain bring a bad mood, do we? That's it.

It's a cracking question, we've got a lot of people want to know about this one.

It is and I feel like it's one of those questions where depending on how you look

at it there's no right answer. There's only advice, statistics and I mean your own

personal preference that can really answer it. The answer is really depending on how

how flexible you are, what your situation, what your circumstances because to

some people it may be in favour to buy a house as an investment or if you're

a first-home buyer, you're probably going to buy it. Exactly, so we'll just touch

based on that, are you kind of kicked it off with the first-home buyer. In terms of

investment, there are bits of ways the government don't really like you doing

investments as a first-home but there are ways around it, I believe it's if you

rent it out within the first 12 months, four, six months out of that 12 months,

you can kind of get around that but it's it's really important and crucial that

people are purchasing based off their own personal capabilities and the market

around them. So I think for first-time investors, we'll word it not first-home buyers,

first-time investors, I think the unit market's definitely something a little

kind of secure for them. A, because you get better yields, so the Northern

beaches yields, you're kind of averaging around that four to five, four and a half

to five net. It's probably the average. I think being a first-home buyer or first-home

investors, I should say, buying a unit, it's significantly more easier for obvious

reasons. Number one, it's price. An entry-level one-up-two-bedroom apartment

on the Northern beaches right now. Entry levels are starting at that, you know,

for a one, it'd probably be around that $750 to $800,000 mark, just to put

get your foot in the doorstep. For a two-bedroom, probably pushing towards, you

know, just under a million dollars, but it's a really, really good price point if

you're a first-home investor to sort of get your foot in the door. So price

would probably be the first thing and from an investor's perspective, having

the maintenance, so buying a unit, you're going to have significantly less

maintenance as opposed to buying a house, which is good, so it's going to cost

you less outgoing, you know, throughout the duration of your ownership, when

you actually, you know, own that investment. And I think it's also really

important, Alex, that we also talk about the downsides for each point, because,

you know, buying an investment, although it may seem really, you know,

buy and you've reached a milestone, but sometimes it's not always sunshine and

rainbows. You do get hit with, you know, you do have straddle to deal with.

Strider's probably one of your biggest expenses, while we're earning a, what,

while owning, I should say, an investment property. So, yeah.

Yeah, I guess, yeah, as you said, you kind of have to weigh out the

pearls and cons with buying an investment, and with the unit, you are

correct. It is cheap, so you'll be able to get in as a first-home investor,

kind of, around that same million dollar mark, you're getting a little bit better

value for money, you're getting a better yield. Your, your demand is there as

well. I mean, DIY in the Northern Beaches has a vacancy rate of about 3%,

which is historically low. And the density around DIY in the Northern

Beaches, your demand's there. So, and the scarcity is always going to be

they always have options, majority of the time, of the year. You'll always

have lots of options to actually consider on the market when you're

actually making the decision to get your investment, which is always a really

good, really good thing to have, really reassuring feeling to have that you've

actually got the options to choose for exactly. Yeah. So, from an

investor's point of view, you're looking at, obviously, you'll, you'll have

the demand there, your yield's there. But in terms of the negatives, you

touch on it, it'll be their strata. So, when purchasing, some of the

due diligence you have to do is within the blocks you're purchasing in. So,

it's like a 70s blocker, 80s blocker, even older. You're going to have to

start look at the condition of the building. So, if you get into a building

where there's concrete cancel, you get into somewhere without getting a

paying for or doing you do diligence of getting a strata report. And

you miss that. You could be hit with a massive 50,000 or 1100,000. And

it really kicks you in the gut as an investor, because it just puts you

that one step back. Yeah. Now, that's probably your worst case scenario.

Strata is great in terms of taking care of the common areas, making

sure the opponent blocks up to date and just kind of running and the thing

property for you. There's another thing just to touch base with the strata

is that when you've got a strata looking after the building, another

unreassuring feeling that you'd have as an investor is that sometimes

most of the time you don't actually have control as to, you know,

unless you're on the committee and you actually have a say over, you know,

what gets done or what gets implemented on the building, you don't actually have

a say in the strata itself, although they do conduct an annual general

meeting once a year, the strata committee. You know, you're paying

a thousand dollars per quarter, something along those lines.

That's four grand a year and, you know, a lot of the times, you know,

you don't actually have general control over, you know, where that money is

being contributed towards. So again, just something else to consider.

But those are the pros and cons guys for units. Houses

completely different, good and bad for a number of reasons.

I think the biggest one just addressing the elephant in the room is

capital growth over time. And I think this is the biggest one if you've got the

money behind you, if you've got a little bit, a little bit more cash to play

around with. The capital growth guys, in particular,

on the northern beaches is incredible. In just in the last 10 years,

DY has done 115 percent capital growth since 2016,

which is really, really big numbers because when you've taken into consideration

let's say a $2 million property, 115 percent on a $2 million property

over 10 years is, you know, over $4 million. Like it's ridiculous.

It's massive money and I think that's where you kind of

fund the split in your investors and you kind of see the change.

Whereas units, you kind of hang on that yield, you hang on that cash flow

or not the cash flow. Whereas houses, you are kind of not really too worried about that.

You're a seasoned investor. You've just purchased and you're happy

to kind of service that mortgage for the capital growth in the future.

And I think that's the main point of difference that you'll see where most

kind of first-time investors and first-timers and just getting into it will kind of stick

around those units. But if you've got a little bit more cash flow coming in, you're happy

to service alone that the debt doesn't really be too detrimental to your way of life.

You're going to go for those bigger investments in terms of a house.

So that's kind of where you see the different differentiation between

houses and units is those two key points, which is really good.

But as you said, houses have performed outstanding over the past 10 years.

And we're kind of predicting it to continue to do that.

I mean, all the beaches hasn't really slowed down much at all.

And we can't predict it. I mean, we're in and out of the property market every day,

every hour of the week. So it's quite a fascinating thing.

We, everyone, I think we touched on it before in previous podcasts,

everyone kind of says that the Northern beaches functions on its own little wheel.

And it's really the case. So it should be interesting to see.

But if you are an investor or if you are someone who's looking to purchase on the Northern

beaches, our offer store is always open, Harry can make a decent coffee. It's free,

so that makes it a little bit better. We've got to do it manually now.

I'm frothing machines, but I can't get there you go.

Yeah, so if anyone is interested in buying an investment or just a property in general,

our offer store is always open, our offer line is always on, our model is we never sleep.

So don't hesitate to get in contact.

And I think we've got to touch base on the negatives of investing in the house,

like we did with the units. I think just inverting that,

you know, the topics we discussed with units maintenance-wise is going to cost you a fair bit.

You know, you think of the average size of a unit and the average size of a house,

obviously a house is going to be bigger, which means, you know, you're outgoing,

you're going to be significantly more of your water rates, your council rates, your strata,

or your outgoing, sorry, not strata, correct me, not strata. Just, just your general

out goings for a house would be a lot more, which would probably be the downside.

So I guess that's the trade-off with, you know, owning a smaller property, like a unit,

you know, your out goings are minimized. And then when you make the decision to, you know, buy

something bigger, better, more expensive, as you'd expect, your out goings be a lot more.

Exactly, in the LA of cash, like generally, when you can get into units, sometimes you can

negotiate a five-temp cent deposit. Five-temp cent on a million dollars versus three or four

million dollars is a big difference. So that's kind of going back to, like, the veteran investor.

That's when you kind of see those people with the cash behind them, with the ability to kind

of outlay that cash and service at once it's in there. Those are kind of the things you have to

weigh up. So that's where I think it's the most important to see the differentiations between

the two. Yeah, 100 per cent. Perfect. Thank you very much. I think we've summarised just about

just about all the points there. We could talk a lot more, but we'll keep it short and sweet,

sure. Just perfect. Just the main points. That's it. Thanks for tuning in, guys.

Appreciate it. You're the rest of your day and you're the rest of your week. And Labia,

see ya. Bye.