Small houses are the most popular target purchase for first-time residential investors across all state.


One or two-bedroom apartments follow in a distant second.


The preference of investors is a key factor in the demand for certain housing types, with greater competition and potentially higher prices for these sought-after properties, according to a new survey by Mortgage Choice. “When comparing the type of property preferences of first-time investors, looking to purchase in the next two years, small houses with one to three bedrooms came in as the clear favourite, almost half, 46 per cent, of all respondents,” Mortgage Choice spokeswoman Belinda Williamson says.


There was a significant gap between the top choice with small apartments of one to two bedrooms ranked second at 21 per cent and large houses, with four or more bedrooms, third place at 16 per cent. “It is not surprising that investment strategies are as diverse and individual as the investors themselves,” Williamson says.


“Nonetheless, there are some similarities when it comes to choices and preferences around property investment.” Houses are “king” for first-time investors in all states, ranging with 56 per cent for South Australians to 39 per cent in NSW.


And in most cases, first-time investors do not expect to stop at just one property. The survey also found that 80 per cent of first-time investors intend to build a portfolio of properties, with two-thirds planning to eventually have up to three properties while another 11 per cent expect to have up to five, and 5 per cent expect to have up to 10 properties.


Property investor and adviser Catherine Cashmore, however, says most of her clients prefer apartments as a “set and forget” option. “They are low maintenance, tend to be close to essential amenities such as shopping, transport and restaurants, and a well-run owners corporation takes care of the upkeep,” Cashmore says.


“A house is a good option – although compared with an apartment, houses have a slightly lower rental return and generally speaking require more upkeep. “However, the land component can offer opportunity for subdivision or further development, therefore there’s typically more potential to add value.”


Cashmore says while there are benefits to both units and housing, it is vital that investors have a clear understanding of what they want to achieve in five to 10 years. “Property is long term,” she says. “Picking just the right property to suit the predominant demographic in any area is also primary.


Read more: http://www.news.com.au/realestate/investing/investors-at-home-in-small-houses/story-fndbarft-1226708785336#ixzz2g3WEn34a