Returns vs Returns

House & land vs townhouses.

Many of my clients ask me, should I buy a townhouse because the rental returns are advertised higher, rather than for house and land package. I just wanted to share the break down of each property type, that we typically source for our clients in the South East Queensland area. There is a difference in the advertised "gross return" vs the "net return" in your pocket. The costs associated with each property are below, and are for properties that I have recently sold, with the weekly rents being the actual, per week rents that were achieved for the first tenant. 

I have not included landlord insurance, typically this $300 to $600 per year, and each policy will vary depending on the location of the property, the sale price, style of property, and the level of cover chosen by the owner. Due top these variances I have left it out and would need to be factor in should you choose this type of cover.

Typical house & land cost break down.

Purchase price $455,000.00 

Weekly rent $420.00 per week ($21840.00 pa)

Gross return advertised 4.8%

Agents management fee 7% $1528.90 pa

Less council rates $2800.00 (may vary on council)

Net return 3.84%

Typical townhouse cost break down

Purchase price $350,000.00 

Weekly rent $360.00 per week

Gross return advertised 5.34%

On site management fee $48 per week  $2496.00 pa

Less council rates $2800.00 (may vary on council)

Net return 3.83%

My thoughts. Where possible, and if their budget allows, would be to always recommend that a client's purchases a house and land package. Even though the "net return" is almost the same. Owning the land component, and having the flexibility to improve or use how the owner/tenant chooses, is an advantage over time. I feel that a house and land will appreciate in a rising market better, should a client wish to sell.

If you would like to discuss returns of property types, properties in different areas or even in different states, feel free to reach out at www.vestrproperty.com.au, or send me a message on LinkedIn and ill be happy to respond.

Vestr.Property offers a no obligations consultation, either on the phone, Skype call, or in person if possible. Our service is a "no-cost" to our clients, and we receive our fee from the builders, thanks.

Cheers Jamie