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Which is more profitable: House or flats? : Real Estate : Nigerialog.com - Nigeria's Premier Online Forum

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Which is more profitable: House or flats?

By: Adenosine (M) |Time : October 10, 2017, 07:04:02 AM


There are many considerations when it comes to which real estate investment to focus on and most of this is centered on the return on investment . In order to reach a conclusion that you are happy with you should consider your options . When it comes to buying a property or building a new one most investors will be confronted with making a choice between a house or flats . They want to know which is a more profitable investment . By considering the pros and cons of both you are likely to make a more informed decision.

There is often a significant difference in the sales price of a flat and that of a house within the same geographical area. A house is generally more expensive than a flat. A house usually enjoys more space and land size that could contain enough space for another structure. Most flats are built as a block of flat with optimum priority given to maximizing the value of the property or the return on the investment . The designs are such that space is carefully managed. Depending on the location the size of land and property will significantly affect the price.

Although flats may be smaller in size a case could be made that flats usually give a higher return on investment . First,it is easier to acquire more flats as part of your investment portfolio rather than buy a few houses . In addition, rental income when put together compared with that of a single property will usually be higher . And when you have only one house your rental income could become stuck if the tenant has difficulty in paying or suddenly defaults . In the case of a block of flats the real estate investor has strategically diversified his interest and is less exposed to loss of income from the property .
The real estate market is strongly influenced by the law of demand and supply . Where there is a strong demand for a certain type of property the prices are bound to go up . In this case the market for flats are usually strong and the price steadily rising . Flats are usually the accommodation of choice for the young , professional class who are either living alone or have a very small nuclear family . Furthermore, because the prices of renting a house especially in high brow areas is usually more expensive young families look for the cheaper option in the form of flats .

While the fact that young , middle class professionals prefer flats is an advantage it is also a disadvantage . One of the characteristics of this demography is that they are very mobile and they do not enjoy the certainty of a lifetime of employment. Their career, job role and other commitments are not yet deeply rooted to the point where they would determine their movement . This means that if they form a bulk of your tenants they will make your cashflow vulnerable. They can leave anytime. This means a greater chance of having a high vacancy ratio .

On the other hand most properties that are built as houses are usually occupied by families that are not thinking of moving for a while. This provides stability for the landlord and the tenant. This allows you time to balance your finances and plan for the future . They are likely to maintain the property better due to the fact that they know that they will be in the property for a while.

A house also enjoys greater capital growth than a flat because many first time home buyers prefer a house to a flat. The demand for a house is usually higher . More real estate investors prefer the privacy , the bigger land area, the opportunity to redevelop and the exclusivity of the title . Shared facility which is a must with flats is nonexistent in a house . It is also easier to redevelop a house into something else that could generate greater returns for the property owner. Due to the nature of the title documents it is easier to secure loans using the property as a collateral.

Another issue that may be of interest is that of management and maintenance of the properties. When there are many tenants in a property it is natural to expect greater management issues . If the property is managed by a property manager he or she has to balance the interests of the various tenants amongst themselves and with the Landlord . With a house you are only dealing with one tenant. Communication with tenants in a block of flats will be more challenging .
In all the decision to buy or build will depend on personal preferences , long term goals and the opportunities available in your environment .

Source Punchng.com

Re: Which is more profitable: House or flats?

By: alagbe003 (M) |Time : October 10, 2017, 05:01:03 PM
Real estate investment is one of the most profitable investments but this article has truly revealed the most profitable out of the two main types of real estate investment

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