House vs. Apartment: Which is Better for Investment?

Jeremy BiberdorfBy: Jeremy Biberdorf

October 20, 2014October 20, 2014

House vs. Apartment: Which is Better for Investment?

Investing in a real estate property is a great way to secure a steady extra stream of income for yourself in the future. It’s a popular trend for many young families that tends to not require too much work, depending on the type of investment you get.

However, it’s also a path that has many forks, with many choices to make. One of the most crucial decisions you have to face when investing in a property is whether to choose a house or apartment.

It’s important to know which type of real estate is best suited for you. If you’re not willing to put in the work to upgrade a house, then an apartment is likely more suitable. On the other end, though, if you want only to have one family living in your investment, then a house is probably a better option.

To help you decide whether or not to invest in a house or an apartment, below are some questions to ask yourself when considering this decision.

Are Exterior Aesthetics Important?

Houses can be delightful structures that look amazing. A house gives you much variety to choose from in terms of exterior aesthetics, while apartments are very limited in this regard. If your dream investment property involves landscaping, gardens, or striking external features, a house is most likely a more suitable investment to you than an apartment.

Do Historical Trends Influence Your Decision?

Traditionally, houses are a more reliable and secure investment. More recently, though, apartments have begun to make up ground (figuratively). As the millennial generation enters adulthood, studies have shown that they are waiting later in life to buy their starter home. That means they are renting for more years than previous generations.

Although houses are still widely considered the safer option in terms of property investment due to the physical land that comes with them, apartments are still popular for the younger generations. This shows that the historical trends of investing in real estate can play a significant factor in your decision.

How Much Responsibility Do You Want?

In renting apartments, some of the burdens of things like maintenance and repairs will be taken over by a body corporate. Meanwhile, in a house, this responsibility will fall on you as the landlord.

While some people like the shared responsibility that comes with an apartment investment property, others prefer being solely in charge of what happens with their property. Also, the responsibility of having to pay rent or a large mortgage might also be a factor when deciding between a rental and a permanent house. Where you sit on this issue will most likely come down to your personality type, and perhaps past experiences with landlords or body corporates.

What Are the Lifestyle Trends in the Area?

It’s important to consider what kind of lifestyles are trending in the area where you’re thinking about buying an investment property. If apartment living is increasing in popularity, that might be the way to go. However, if houses are still the dominant home structure, this could be your preferred route.

Are You in This for the Short-Term or Long Haul?

If your investment property is a long term financial strategy, the past points to houses as being the more stable and profitable option for investing, meanwhile, recent evidence suggests that, in some cases, apartments can yield a stronger return in shorter or medium time frames. This is an important factor to consider when making your decision; typically, investing in a property is something done with the long-term gains in mind. However, whether this is the case for you is determined by your goals and perceptions.

House or Apartment Investing Comes Down to You

There are several things to take into account when deciding between investing in an apartment or house. When it comes down to it, the choice depends upon your personal preferences and your view on all the questions above, as well as anything else you consider an important factor.

There are both advantages and disadvantages to either option. Regardless of your final decision, you’ll most likely find that investing in property was a wise decision that results in financial rewards and emotional satisfaction in the future.

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About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. Also check out his contributions to Equities.com and Benzinga.
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