Townhouses: a smart investment? Our Bayside builders explain
People love investing in property – it’s more secure than the financial market, and unlike stocks and ETFs, you still have a tangible asset should the market take a turn.
Property is an investor’s favourite asset class. In particular, townhouses are a popular choice in the property market.
The appeal is easy to understand – live in one, rent out or sell the other. Sounds simple, right?
As with most large financial decisions however, it’s one that needs to be made with a lot of careful thought and consideration.
What should you look at? Our Bayside builders explain!
How does the market look?
Let’s address the elephant in the room: yes, the property market has taken a bit of a hit recently.
If you’ve been following the news at all during the last couple of months, you’ll know that property prices in Melbourne have dipped, dropping by 6.4% since last year.
However, it isn’t all bad news!
For starters, lower prices might actually be just what you want, as this allows you to buy a block of land on the cheap.
Additionally, units and townhouses haven’t been hit by the slump quite as hard as houses.
And if you plan on renting out your townhouse rather than selling it, we’ve got some good news: according to Domain rental prices for units and townhouses actually rose in the previous quarter, coming within spitting distance of median house rents.
Obviously, this will depend a lot on the area you’re building a townhouse in – what we’re trying to say however is that it isn’t all doom-and-gloom, and that you shouldn’t dismiss the idea out of hand.
Our townhouse builders explain the pros of investing in townhouses
Live in one, sell (or rent) the other
If you’re looking for a source of additional income, townhouses might be just what you’re looking for.
The additional income from an adjoining property or townhouse can help offset the cost of construction. Additionally, if you decide to rent out your property, you’ll enjoy a steady stream of passive income to enhance your salary, or keep you afloat during retirement.
Double your return
Townhouse builders will tell you that townhouses offer a better ROI than individual houses.
That’s because you’re using (and monetising) more of your land – you’re essentially capitalising two properties instead of just one, increasing your return (regardless of whether you rent or sell).
One of the reasons townhouse prices weren’t hit as hard by the property downturn? Strong demand for townhouses.
Honestly, we aren’t surprised. As we’re sure you know, much of the price of a house comes from the land it’s sitting on – townhouses, duplexes and units take up considerably less land (think a more manageable backyard!), which has an effect on purchase price.
Townhouses can be more than just a monetary investment
Anyone who has kids on the verge of leaving the home knows that entering the market as a first-home buyer can be hard.
Even with the recent slump in house prices, the younger generation may struggle to secure a place to call their very own.
With townhouses, you can help them leave the nest and transition to living independently, while also ensuring that they’re closeby.
Things to remember from our townhouse builders
In case you couldn’t tell, our townhouse builders here at Blint are firmly in the “yes” camp when it comes to the question of whether or not townhouses are a smart investment.
However, it’s important to remember that townhouse construction isn’t for everyone. As we mentioned above, the best type of investment depends heavily upon your goals, your finances and your individual circumstances.
In addition to looking at the numbers, our townhouse builders advise you think about…
New rental laws
Coming into effect in July 2020, new Victorian rental laws will offer renters the strongest protections in the entire country.
While the new laws contain net positives for renters and landlords alike, there’s no denying that property owners stand to lose some of their current powers.
- Landlords will no longer be able to deny pets
- Rent increases are limited to once every 12 months
- Tenants can make minor renovations or modifications without written consent
- “No cause” terminations are being prohibited
There’s a lot to unpack, much of which is beyond the scope of this blog.
That said, if renting out one of your townhouses was the original plan, make sure you have a clear understanding of these upcoming changes.
Permits and applications
Building (and building in Bayside in particular) comes with a whole range of different permits that you’ll need to obtain – especially when your construction plan calls for townhouses.
Planning permits may be slightly harder to get approval for with townhouses, as they add more congestion than standalone houses.
In addition to building and planning permits however, you’ll also need to apply for a whole range of different subdivision permits unique to townhouse construction.
And that’s on top of Bayside’s already strict permit regime!
Need help navigating the spider’s web of different permits and applications? Get in touch with our Bayside builders – we’ll take care of it all! We know the local area better than any other builder, and have an intimate understanding of the ins and outs of your local council’s regulations.
Designing your townhouses
Any investor’s investment objectives must be tailored to suit their individual circumstances.
That means that the size, design and even the decision to build townhouses will depend on your requirements and goals.
Let’s say you’ve decided that yes, townhouses as an investment do fit in with your goals.
Your work doesn’t end there. Working alongside your Bayside builder, you’ll also need to design your townhouse in a way that maximises your return and turns it into a highly sought-after property.
While you may not be able to control things like location, you can control other things. Be sure to talk to a custom builder about things like:
- Bedroom location – it’s increasingly common for living areas to remain downstairs, while all bathrooms head north to the second storey
- Powder rooms and toilets – do you need a second toilet for guests and visitors?
- Adjoining walls – many buyers value their privacy, and will avoid duplexes and townhouses with adjoining walls
In most cases, this requires a clean-sheet design. Luckily for you, our Bayside builders specialise in boutique townhouse construction!
Choose Blint’s Bayside builders for your townhouse project
Whether you’ve just bought a block of land, or want to add a second unit to your existing property, building townhouses is a smart choice.
Another smart choice is choosing Blint Design + Construction for your townhouse construction project!
Our townhouse builders are specialists in boutique building.
We work closely with you to ensure that your townhouses are perfectly aligned with your investment goals, and work to design properties that generate maximum ROI.
Since we work solely in Melbourne’s south-east, our Bayside builders know the area’s permit scheme inside-out.
Thanks to this familiarity, we minimise waiting time, helping navigate the maze of different permits and applications that come with building townhouses, making your project as seamless and painless as possible.