House vs Unit vs Apartment - The $600k Decision For Tradies

Book a Free Strategy Call with Joel → https://calendly.com/joel-tomii/clien...

In this episode, Joel and Brodie break down one of the most common questions tradie investors are asking right now: should you buy a house, villa unit, or apartment with a $600,000 budget? They unpack the pros and cons of each asset type, where they fit within a portfolio, and why changing
market conditions are creating new opportunities for investors who are willing to adapt.

Why tradies need to watch this:
• Learn what type of property you can realistically buy with a $600K budget in today's market
• Understand the differences between houses, villa units, and apartments and where each fits in a
portfolio
• Discover why regional houses can still be a strong long-term play despite affordability pressures
• Find out why villa units are becoming one of the most overlooked opportunities in Melbourne
• Learn how land content impacts long-term growth and why it matters for investors
• Understand why boutique apartments are making a comeback and how to avoid the common
apartment traps
• See how rental yields, cash flow, and the latest tax changes influence property selection in 2026
• Find out which asset Joel and Brodie would personally choose depending on your stage of
investing

Timestamps:
• 0:00 – Welcome back & today's topic
• 0:20 – Calling Chris on site: what's for smoko?
• 2:23 – Why the $600K budget is becoming more common for investors
• 3:22 – House investing: what can you realistically buy for $600K?
• 9:34 – Regional investing, land content & long-term growth potential
• 12:33 – Pros and cons of buying a house as your first investment
• 15:39 – Villa units explained: the middle ground between houses and apartments
• 18:50 – Why villa units could be one of Melbourne's biggest opportunities
• 23:37 – Risks, strata considerations & ideal portfolio positioning for villa units
• 26:21 – Apartments: the biggest myths investors get wrong
• 28:34 – Boutique apartments vs high-rise developments
• 32:21 – How to identify an investment-grade apartment
• 34:00 – Why strong rental yields are changing the game in 2026
• 37:00 – Real-world apartment case study & buying below market value
• 39:54 – Rapid Fire Round
• 44:11 – Which asset would Joel and Brodie buy today?
• 45:00 – Outro

Transcript

SPEAKER_00 0:00

We're going to be running through what you can buy with a 600k budget and whether you should be buying a house, a unit, or an apartment, and which one makes the most sense at different stages of your portfolio. We're going to be calling one of our goodmates, Chris. Is a Sparky on site and seeing what he's having for Smoker today. Welcome back. You're on site with the Property Tradies. Brody, we're going to be going through a 600k budget, house versus unit versus apartment. But before we get into that, we're going to give one of our good mates on site, Chris, a call. See what he's up to for the day. See what he thinks about the topic. And what's on the menu for Smoko.

SPEAKER_02 0:40

This is going to be this is going to be so exciting. I think there's nothing better than just getting stuck into some one of the boys on site. Beautiful.

SPEAKER_00 0:46

All right, let's give him a call. Face timing Chris at the moment. Let's see. Hopefully he picks up. FaceTimes going through. He must actually be doing some work. Chris, what's going on, brother? How are you?

SPEAKER_01 1:05

I'm must, mate.

SPEAKER_00 1:07

You're uh live on the potty here, mate. We got got Brody over here. And um we're about to get stuck in the topic. So, first off, what's on the menu for Smoker today?

SPEAKER_01 1:19

Um, it's Friday. I haven't done any meal prep. I was thinking macca's, so macca's. Double quarter pounder, but could you go over six chicken nuggets as well?

SPEAKER_00 1:29

Jeez, start the weekend strong with a double quarter pounder. So we got the topic. Yeah, that's that's good. Where are you working on site at the moment?

SPEAKER_01 1:40

Um, I'm gonna suicide out in at the priors, which is out in the like minute month and all that.

SPEAKER_00 1:45

Yeah, beautiful, lovely. So we got the topic today 600k budget, house versus unit for a versus apartment. We're gonna make the case for each one. Which one do you think is gonna come out on top?

SPEAKER_01 1:59

Well, I think traditionally speaking, you would think house.

SPEAKER_00 2:02

Yep.

SPEAKER_01 2:02

Um, knowing you guys, I have a feeling you're gonna pull a little sneaky one with me. So let's let's hear it.

SPEAKER_00 2:07

Oh, a little sneaky one. Interesting. Well, thanks for jumping on the call. We will catch you over the weekend, mate. See you later, big dog.

SPEAKER_01 2:17

Cheers. Bye.

SPEAKER_00 2:22

All right, that went well. Let's get into the topic then. So 600k budgets, it's a super common one we're seeing at the moment, especially with the the changes and effect to borrowing capacity. So we're gonna go through and break down the benefits of each um and what you need to look out on.

SPEAKER_03 2:41

Yeah, it's a great, it's a great topic. And I think a lot of people will find value out of this because they're finding themselves now in this this price range. Yeah, and there there is a couple of options, like which one's right for me, and it will vary depending on everyone's situation, but I think if we lay it all out and go, this, you know, this one's good for this reason, or maybe this one is good for another reason, we might be able to help a couple people who are stuck out there. Exactly.

SPEAKER_00 3:06

Well, the market we're we're working at the moment's completely different to anything we've seen over the last five years. Like the the game plan's changed, and those that adjust are gonna benefit, and the ones that don't are gonna struggle with investing in property moving forward. So let's get into the first one. The most traditional way of investing stands the test of time. The the golden, the golden child of property investing, a house. What do they say?

SPEAKER_03 3:34

Safe as houses, safe as houses. That's the reason why they say it. And that is genuinely in the past, if you buy a house over the long term, you will be safe and it will be a good investment. However, we want to make some money sooner rather than later. Yeah. And we want to make sure that we're picking the right investment for our current situation.

SPEAKER_00 3:54

Yes, definitely. That's so important. So with houses over the last 20 years, they've grown at an average rate of 6.8%. If you get 6.8% per year in property investing, you're doing well, you're beating inflation, and you're definitely building wealth. But the question is moving forward, is it going to bring the same amount of growth? And that's that's the the question we have to ask. And more importantly, can you buy a house for $600,000?

SPEAKER_03 4:24

That is the the tough question. I think people will have to make some adjustments to the way that they view houses and maybe the locations that they are possibly thinking of buying in. So, yeah, some adjustments will need to be made, but it doesn't mean it's impossible. So I'm excited to get into that.

SPEAKER_00 4:42

Yeah, cool. So the first question with it being possible, you're on the ground, Brody. Um, we're buying all different types of assets. Are you buying any houses for $600,000 or less? And what do these locations and properties look like?

SPEAKER_03 4:59

Yes. So to answer your question, we are buying properties for $600k or less, houses, I should say, but it's becoming more and more unlikely and unusual, I should say. So the the typical house for $600K for our investor, first and foremost, it's in regional. If you think you're going to be getting a a house of any of really any caliber for 600k or less in the metro areas of our capital cities, and for us specifically Melbourne at the moment, you it's kind of a pipe dream. You're you're fantasizing a little bit there. So you got to swallow that tough pill, like I was kind of alluding to before, and look at regional if you're still wanting to get in while you have a chance, because time's running out.

SPEAKER_00 5:45

Yeah. And when we're looking at houses, I guess what's a typical land size that we're looking at? Because I think the the important thing to understand when we are investing in houses is we're trying to maximize the land content that we get here. Because in property investing, land is what appreciates in value, but the house itself actually goes backwards. Yeah, depreciates 100%. Because it is just materials at the end of the day, and as they weather over time, they become less valuable. So the land is that scarce bit of asset which everyone wants.

SPEAKER_03 6:22

Yeah. No doubt in my mind. And of course, as we enter into a future with less and less building happening and more and more, you know, immigration or or people getting born or whatever it is. People need houses, there's not enough of them. Yeah, that land content is going to become even more valuable because you might want to put like a splitter block and do more developments down the line. That's kind of getting into the nitty-gritty, but at least if you get land, you're giving yourself options.

SPEAKER_00 6:50

Options, yeah. And that's a super important part of property investing. And it's why if you invest in a high-rise and there's shared stratas, shared ownership, it gets really complicated because you're losing all of that control that you would get with a house.

SPEAKER_03 7:05

So when we're talking about land size with homes, we personally will not buy a property unless it's got over 400 square meters of land. That's kind of our red zone, our cutoff point. Because if we're going to go any less than that, you know, we're looking at like a townhouse or maybe one of the other plays that we're going to mention into soon, which are um villa units. Your villa units, you may as well just get something like that that's a bit nicer. So if we're going to get a house, we're gonna we personally set a minimum of 400 squares. Ideally, you want to be 500 or above.

SPEAKER_00 7:38

So first thing we've got the land size, 400 squares plus we're looking regionally. Next thing I think is super important to understand is the yield that we can expect and maybe what a house in this current market is likely to cost you with interest rates. So with the purchases that you're making uh for houses in this price bracket, where do you see the typical yields sitting in a really strong growth location?

SPEAKER_03 8:04

Yeah. So because we're purchasing in regional, it's typical to have 4% or above yields. Yeah. If we're getting bel sub 4%, we're not really interested. Yeah. Right. Because we're we're buying regional, there's an element, there's a time, there's a small element of risk. Yeah. Obviously, we do our research and we avoid that at all costs, but there still is a small element of risk. So we want to justify that as much as we can by having a healthier yield. Yep. And 4%, once again, we have these minimum numbers, 4% is our minimum, but we're looking anywhere, typically in Victoria, anywhere from four to five percent.

SPEAKER_00 8:39

Yeah, cool. So I guess with that yield um to land ratio trade-off, I think it's super important to mention if you're maximizing your land content and maybe getting 800 square meters, you might get a lower yield, but that's an asset that's going to have more flexibility to develop or build a granny flat over time.

SPEAKER_03 8:59

It's a great point that you make because there are compromises in property investing. And so you might come across a property, like you said, that has an awesome bit of land, but the yield's a little bit less. That's a pill that you're happy to swallow because you're getting that bigger land size. It's and it's not just those two things, like it comes in all different shapes and sizes with property investing, but there are trade-offs. You just kind of got to understand what's um what's benefit to what's beneficial to you or what's going to work in your situation right now.

SPEAKER_00 9:28

Cool. So we've got house, minimum uh 400 square meters land. Um, we've got a regional location. Also, what I'll just touch on with regional locations is to minimize a bit of risk, we focus on areas that are still within distance to a key metro location, um, you know, within two, three hours of Melbourne CBD, because that way you still have people that will work in the city and drive out to these locations for lifestyle. So that's just hedging um your bets a little bit further as well with purchasing regionally.

SPEAKER_03 10:02

Great point. We're not just investing in any small, raggedy little regional town. There is a lot of um process and research that goes into this. And the regional towns that we're investing in, they're otherwise known as satellite cities. So they're mini cities of themselves, they have their own economics going behind them, they have their own workforce, people live there, they've got um exports, all the different things, whether it is agriculture, whether it's manuf manufacturing, they've got things going for them where they can sustain on their own. People can live their whole life there without leaving, essentially.

SPEAKER_00 10:36

Yeah, cool. So we've got the the regional location and then a rough yield of of four to five percent. Now, let's get into the the pros and cons of this and and maybe where a house makes sense at this price point in your portfolio if you have this budget.

SPEAKER_03 10:55

Yeah, so where it makes sense, you you gotta, once again, it's all these compromises, right? Because you're going to be going for a house on a bit more land, because that's what you're aiming for with a house purchase. You the house might be not as nice as a as an apartment or a um um a villa unit or something like that. So you might have to accept that this house needs a little bit of cosmetic work, and that's something you got to be willing to do entering into the into the market. So you're not gonna get something that's perfect and flashy because we're buying at the bottom end of the market.

SPEAKER_00 11:31

Yeah. So you have to reset your expectations. If you're wanting this land component that everybody's chasing with that price point, you can't get this perfect type of property. You've got to adjust and be willing and understanding that you're gonna have maintenance issues in the future and you might have to put some money into this asset at some point. Now, that's probably the key con of this. The pros uh are really uh are really big with a house, especially in my eyes when you're first starting out your portfolio. If you are in a position where you're buying your first property, always love to buy a house for the first one because you've got to look at it in the lens that if you decide to not invest from this point onwards, and this is the one property that you do buy in a 20 to 30 year timeframe, this asset is proven to perform the best. So even though a unit might grow better in a two or three year time period, if we extend that horizon, a house is going to be the best play.

SPEAKER_03 12:33

Yeah, it's all about understanding your investing style, what you're willing to do, being realistic. But you're right, if for the everyday person, we like to call them a bread and butter deal, bit of land size, a decent house that doesn't need too much to it, but maybe you can do a little bit to it to add a bit of value, especially at, you know, we've got tradey listeners, right? So if it so happens that you're somewhat in the region, it doesn't always work out this way, but if you're somewhat in the region of the investment property that you've purchased, you know, use your skills, add a little bit of value.

SPEAKER_00 13:03

Or if you're that active investor, we always say, invest in the best location. If you're willing to take a couple of weeks off, you know, use some annual leave, go and put some work into the property, that's going to leverage your returns on the property and be able to get that snowball effect going and get into that next asset a little bit quicker.

SPEAKER_03 13:22

We actually have a client who's doing that right now. He's flying down from Queensland. There you go, just did a um a great purchase, undermarket value needed a little bit of a needs a little bit of a lick up, and he's happy coming down here doing it himself.

SPEAKER_00 13:35

Exactly right. And that's where it's so important. Location first, and then everything else you do as an add-on from there. So key positives and negatives. A house for your first asset is always going to be a pillar to the portfolio. Um, if you're in this position, I'd focus on this. Um, especially if you're looking to hold over the long term negatives, there's likely to be some more maintenance things that come up in the future. Um, and you're also going to have to what's the word? Yeah, adjust your expectations.

SPEAKER_03 14:09

Another kind of negative I might throw in here, and it's you could probably spin it as a positive if you want, but everyone's going to be wanting to do this because of the adjustments that are happening in the budget and and um interest rates and all that kind of stuff, like you touched on at the start. Everyone's been moved down to this price bracket, right? So once upon a time, people were able to buy for 700, 800, 900. Everything's been knocked back, and all those people who are in that range above your 600 range that you're looking at purchasing have now entered your 600 range. So that is added heat, added competition, all that. So it's it's a slight negative, but if you're able to get in and get yourself a good deal, yeah, then all that heat will push push your value up. So it's negative and positive.

SPEAKER_00 14:52

Definitely. So, yeah, to recap, guys, 600k for a house, it's it's still completely possible. Um, and if you're starting out your portfolio, this is going to be a great asset. The last thing to touch on is cash flow. So with the four to five percent yield and with negative gearing being gone, this asset over the other two is going to cost you more to hold. So that's something to keep in mind. But if you have the borrowing capacity, it means you can afford it. Yes. Yep. 100%.

SPEAKER_03 15:23

Well, I think you hit the nail on the head there. It's an investment at the end of the day. So look, you're look you're looking to make money on this. Yep. And if you got to outlay a few costs along the way, that's for the greater good of the investment. And you know, it's the game, right? Exactly right.

SPEAKER_00 15:37

Pay to play. That's it. All right. Second asset is the the villa unit. So uh people might not know what a villa unit is. So basically, it's a uh a unit that has some land attached to it. So uh a little house that's got maybe 100 to 200 square meters of land, sometimes even a little bit more. We actually bought one for a client with 400 square meters of land. So a misconception can be that uh you don't get as much land content, but in some cases you can actually get more than a house, which is important to note. And they're typically sit anywhere from two on the one block of land, anywhere up to eight, ten. Um, they really vary in size.

SPEAKER_03 16:22

So yeah, all different come in all different shapes and sizes. Um, the one thing I I kind of always think about when I think of villa units is older people because they've downsized into the villa units. They've they've left the big family home, their kids have less left the nest, and they need something that's just easy to maintain, maybe in a bit of a better location as well. I think of um older people, and I also think of young couples who don't yet have the big family and they're just getting into the market or the location as well.

SPEAKER_00 16:51

Yeah, and yeah, people our age as well. Like, I know we're looking at rentals recently, and you want something that's easily maintained, not something where you're gonna have to be mowing lawns, clean the garden up every weekend. So a villa unit does have that rental appeal.

SPEAKER_04 17:05

Yeah.

SPEAKER_00 17:06

Now, with this asset, there are some amazing options at the moment for that 600k price point. And the beautiful thing about this asset is you're getting into a metro location within close proximity to the city and you're getting land content at the same time. So if you are someone that's you know not wanting to go regional, um, this is a perfect play for someone like you.

SPEAKER_03 17:28

Yeah, you you keep making great points, mate. I hate to give it to you, but you are right. With this one and the next play that we're gonna talk about after this, the biggest factor is you have options. Yeah. If you're someone who wants options, then these are these are gonna be the way to go.

SPEAKER_00 17:44

Yeah. Now, with these assets, they do typically grow uh over the last 20 years a little bit less than houses. So we've got anywhere from 4.5 to 5.5% average annual growth per year. Now, when I'm talking about these figures, this is just Australia-wide throwing everything together. So it's not a clear picture of each individual market, but it shows that these assets do grow and they can be a really good one for capital growth at the same time.

SPEAKER_03 18:14

I think it's important to throw a reminder out there that while we're saying these national averages, we're always aiming to smash these national averages out the park. Like if you do the right uh research and data analysis and you put the time in, these are worst-case scenarios. And as worst-case scenarios, they're still pretty decent.

SPEAKER_00 18:34

Yeah, yeah, definitely. Now, why does a villa unit make sense now more than it has in recent years? Because we've solely pretty much been investing in houses over the last four years, but now we're looking at these different options. Why is that the case?

SPEAKER_03 18:51

There's a lot of different reasons. The first one that comes to my mind is one, affordability. Yep. And then also availability. Yeah. Right. So affordability is people just literally cannot afford to buy houses that they were able to say within five years ago or even less than that, three years ago. And so they've been pushed down, everyone just keeps getting pushed down the bracket to these smaller options that are more affordable. So they haven't quite hit the the growth period that the houses have yet. Yeah. But typically over time, um, units and and these apartments that we're talking, sorry, um, yeah, units that we're talking about, and then apartments that we will talk about, they trail. Yeah, they always trail the house curve. So houses will do their thing, and then just behind that wave is the next two. Yeah, definitely.

SPEAKER_00 19:40

This is what I think villa units, it's their time to shine. You've got those affordability constraints, everyone's buying there. Um, you've got strong yields and borrowing capacity has changed for investors, and then you've got the first home buyer scheme as well. So all these moving parts that are pushing everyone into the same asset type. And on top of that, what does it cost to build something like this in a built-out location? You can't build it for what you can buy it for at the moment. So until those prices catch up for the existing stock, you're not gonna see new buildings come. And if there's not more supply, that means we're gonna get some really strong growth with this asset type.

SPEAKER_03 20:23

Yeah, well said. I I heard you just mention location there. That's another reason, right? Because if you want to live in a certain location, that location, the average house price is 1.1 to 1.5 million. Yeah, uh, that's pretty unachievable for the you know the average battler. So moving into a smaller land size, you still get your land component, but it's a bit smaller. And then the house size, or unit, I should say, unit size is a bit smaller. It's just an achievable goal to like get you know onto the ladder, the property ladder.

SPEAKER_00 20:54

Yeah, cool. So with these assets, you you're looking at a yield typically anywhere from four to five point five percent. The it varies quite a lot with this, uh, with the villa units because you can buy in a really high-end area where houses might be two million, but you might be getting a one-bed or a two-bed on a small block of land, but then you might go to another suburb and you could get um, you know, an outer fringe suburb, you could get a three-bedroom on a little bit bigger of a block. So this type of property varies quite a lot in what you can expect.

SPEAKER_03 21:32

So, how do we know which location to go for? Or how do we know what villa unit is better compared to another?

SPEAKER_00 21:39

Yeah, it's uh such an important question to understand. The key things I look at for units where a villa makes sense is price disparity between houses and units. If you've got, like you mentioned before, houses at 1.5 million and you can go and buy an asset for $600,000. Well, that's a huge Gap, and if we look at historical numbers, they're usually a lot closer than this. So, as you mentioned again before, houses will grow first and then villa units will follow. So, when they make sense is when that price disparity doesn't make sense. Yeah. So you're you're looking for different numbers in markets where it doesn't make sense for that to be so big.

SPEAKER_03 22:26

Yeah, for that particular property to be so undervalued almost that that we look at it. And you don't have to be a genius to kind of notice what's been happening around Australia. Yeah. We've already seen villa units go pretty crazy in um in well, Sydney. It's always been uh you know expensive to buy in Sydney, but more so Brisbane. Yeah. Like these villa units, I'm I tell you right now, someone who's been buying in Brisbane or even lives in Brisbane, if they see the value of these villa units along the Bayside in Victoria, they'll be like, why is it so cheap? It makes no sense.

SPEAKER_00 23:00

Correct. Yeah, you're looking at three, four hundred thousand dollar price difference from a Melbourne to Brisbane in a similar type of suburb, which again doesn't make sense. And what you start to see when a lot of growth happens in this type of asset is more people that own houses will then start to develop, more supply comes, and then over the next five, 10 years, prices won't grow as strong because that supply is there. Yeah. So positives and negatives, and where you should put that into your portfolio. Positive is you can get into a metro location with this budget, um, and it it gives you a little bit more safety if you are worried. Um, negatives, look, sometimes there can be strata. Typically, you want to find these units that don't have it. I think that's another great point to touch on is um you want to find a unit that isn't uh doesn't have a shared ownership of um costs.

SPEAKER_03 24:00

Typically, you'll find these stratas or shared ownerships on the bigger blocks. Yeah, it might be like a unit that's one of eight or one of ten, and they have shared driveways and they've got a couple of trees that need maintaining and all that kind of stuff. Our ones that we love, if we can find a villa unit that's a part of four or less, most of the time they don't have strata. Yep. And then you're just it's literally just a small house at that point. You don't need to worry about any of these extra costs that come sneaking up on you.

SPEAKER_00 24:29

Exactly right. And with some of these, you'll have shared walls and you'll also have ones that are standalone. Both are fine. Um, you'd rather avoid that strata. Um, where I see this type of asset being great in a portfolio is it has so many different spots where you can put it in. I think it's a really good starting asset because you're still getting a strong land component. I think if you are buying at this type of asset for your first property, the focus on land content is a little bit more important. Um, whereas if you're buying it for property two or three, you might go with a little bit smaller uh plot of land because you might get a three-bed or a two-bed over a one or two because the rental yield will be a little bit higher.

SPEAKER_03 25:16

Yeah. It's um the way I view it, who would who would suit this kind of property is someone who's maybe a little bit more concerned about the risk. They don't want to move, they don't want to buy regionally, they might not want um a property that's needs a little bit of work because you can buy set and forget villa units. Yeah, right. So if that's something, if you if you want to get into the property market, get a little bit of land under your under your foot to start things off, and you don't want to even think about it, you just want it to be, like I said, a set and forget. Yeah, this is for those kind of people.

SPEAKER_00 25:49

Yeah. And that's I think a big difference with the house at a $600,000 budget to a villa unit. You can get something set and forget, you can get something with a similar land size in a better location. Now, if you use common sense there, that doesn't typically make sense. And if you look at other markets outside of Melbourne across the country, that price disparity is there. Yep. Well said, my friend. So let's get into the last one, the apartment. Now, apartments, who the hell would invest in an apartment?

SPEAKER_03 26:25

Look, if you invested in an apartment in Victoria within the last 10 or so years, probably didn't do very well. Yeah.

SPEAKER_00 26:32

And why is that the case? Like, why do apartments not grow? Why have they not grown in some markets? Why do they grow in some?

SPEAKER_03 26:41

Well, I think the stigma most likely comes from your big, huge developments. A lot of people have probably heard of Docklands. That didn't go very well for a lot of people. I think a lot of mum and dad investors or yeah, maybe newer investors at the time got roped in by these property sprukers who said, you know, come buy a freshly built apartment, like it's brand new, you know, you can depreciate it. You don't have to, it's set and forget all this kind of stuff. But there was just way too much supply.

SPEAKER_00 27:12

Yeah. And there was no demand, no one wanted it. Yeah. So there's a lot to unpack there with apartments. Um, a lot of the time when you have a growing population, the government can change the zoning rules in certain areas, which means you can build high-rise apartments. Now, a lot of the time there's not the right planning that goes into this, and it's a real short-term fix. So with Docklands, they built a shit ton of apartments, but they failed to build the infrastructure and livability around that area. So you build and you buy, but then you don't have that demand there, um, which means that these assets we've seen, people sell 10 years later for $100,000, $200,000 less, which is financial suicide. So does an apartment make sense? The answer is sometimes. Sometimes. And if we look at markets outside of Melbourne, such as Perth, Brisbane, Adelaide, the apartments have done really well over the last three, three years, better than houses, because they're close to the end of their cycle. People are priced out of houses, they're priced out of villa units, and they've moved on to apartments. So these are an asset that we're starting to buy now. I'm actually probably gonna buy one personally, yeah, but it all comes down to market timing. They're not the best asset for the most of the time.

SPEAKER_03 28:34

I think what's probably best for you know everyone out there on site to understand is not all part apartments are made equal. Yes. They are just because you hear apartments, doesn't mean one is the same as another. Yeah, we touched on Docklands and High Reserve. We're not touching that shit at all. What we're touching is boutique. Okay. You may have heard us talk about the new play. Yeah, this is our new play. We're we're buying apartments that are in boutique blocks, small blocks, 15 apartments or less. If you've ever driven through, you know, St. Kilda or some of the inner kind of suburbs of Victoria, they would have them everywhere else around Australia. But they're those smaller um brick, like 70s built apartment blocks. They don't have an elevator, they don't have a pool, you know, it's just stairs up to the apartment. But why are we buying that? It's because of um its scarcity. It's like one, we were touched, we were talking about it before um with with the villa unit. You want to get like a one of four or a you know, a one of three. We want to be a one of 15 because it's the value of that overall block, right? We want to have a higher percentage of ownership of the land.

SPEAKER_00 29:43

Of that land, correct. So if you're buying in a block of eight or 10, um, and let's say that block of land in St Kilda is a thousand square meters um and it's worth one mil, then you're still getting a hundred grand of land built into your asset. So while it's an apartment and you're you're buying this little uh building, you're still getting land content built in. So that's super important. It's funny how we always it always comes back to land content, even in a small little apartment.

SPEAKER_03 30:13

It comes back to land content.

SPEAKER_00 30:14

It does. And prices for other assets like high rises in some markets have grown in recent years, but you can build more of them. So as soon as developers start developing again, your price growth stops straight away.

SPEAKER_03 30:28

Yeah. There's what's if you own one of like 500, what makes your apartment special? Exactly. What makes your apartment going to cost more? What do you how are you gonna be able to sell that apartment for more than the person below you or above you? Yeah, it's just like it's got you're not gonna be able to make reasonable money over time doing it that way.

SPEAKER_00 30:49

Yeah. So when we're looking at an investment grade apartment, we're focusing on a boutique block, still getting some land content built in, similar to the villa units, we want that price disparity between houses and also apartments. And we want to make sure that the strata is low. So another reason why you focus on a smaller block that doesn't have the pool, doesn't have all the amenities when we're looking in an investor's lens is because your costs to be a part of that ownership per year, like covering insurances, maintenance on the block, is likely to sit around $3,000 per year. Yeah, sometimes I've seen it even lower. Even lower. But then you look at these high rises, you can be six, eight, ten thousand, even more. And another key thing is the buildings that have gone up in recent years, they're filled with issues, builders that are being sued, things that need to be rectified, and that comes at the cost of the owners of that building. Yeah, you see where they have to raise funds of $20,000, $30,000 per owner to fix these things. And that is a horrible position to be in because you can't sell that on to anyone else because no one wants to buy a property that they've then got to spend $20, $30 grand on. They want to buy something that's ready to go set and forget, and cost is gonna be low.

SPEAKER_03 32:09

Yeah. Look, great points all across. I I would like to mention that there is so much more work involved and research involved in apartments. Yep. And we've touched on, you know, good ones and bad ones, but even with the good ones, say for example, you find an apartment in a boutique block, you know, it's got less than 15, it's got a low strata, and the yield is it's all adding up, but there's still more to it. Yeah, there's things you gotta check. Like there's the list, like we have a list, right? Yeah, of regularly, it's around like 30 to 35 things we check on on a on a house. Yep. That list balloons to like 50 plus for a unit for an apartment.

SPEAKER_00 32:51

So um because you've got to look into the the strata, that ownership contracts, and if there's any um works that they're trying to raise funds for. So that's where that house gives you more control, which we were talking about before, because you're at the the crux of whatever the strata decides.

SPEAKER_03 33:11

You're at the mercy of what everyone else wants and they might have ongoing works. Yep. You might be, you might be, like I said, you might have found the perfect property, but they might be halfway through getting the roof restored that costs a hundred grand. Yep. And so now you're up for that for the next, you know, three to five years. Yep. They might have um future works that are already booked in, but if you're if you're not reading the contract properly, or if you don't have a conveyancer that is good enough to understand these complex, because they are more complex, and has dealt with those before and has dealt with apartments and purchasing apartments and the contracts that come with it, then you could be finding yourself in a world of pain.

SPEAKER_00 33:50

Yeah, definitely. So now let's get onto the yield. So this is the exciting part. This is the exciting part and why we love this type of play at the moment. You would when we're looking at yields, we're looking at anywhere from six to seven seven and a half percent at the real top end, which with negative gearing being gone, this asset with a 20% deposit and a lower strata rate is virtually covering itself or being very close to from day one. Yeah. So if you are looking to grow a portfolio, this is going to allow you to keep doing that. And also, if you're an investor that wants a property that covers itself and you're not interested in having negative cash flow, well, then this is the perfect asset for you. And then on that as well, when we're looking at where you put an apartment into the portfolio, look, I would still suggest going for a house with your first asset because you don't know if you're going to buy property number two or number three. It's going to be the best hedge for the long term. So I think if this is your second asset or third asset, this is great. And to give some insight into my own portfolio, I'm pre-approved at the moment and having to take on a high interest rate. And it's property number six. So I'm looking at this asset because the rental yields are super strong. We're getting in where prices haven't grown for 10, 15 years. And it means that yeah, we're in a position to experience capital growth. So positioning myself early to have upside from both both sides.

SPEAKER_03 35:26

Yeah, the yield is really the biggest attraction and driver of this new style investment that we're talking about. And the reason why it's becoming more and more popular with our own clients and then investors throughout, it's because of this new budget shit that has come out. Okay. So all of a sudden, negative gearing looks like it's going to be taken away from investors. So a positive geared or near neutral geared property invest uh uh apartment that we're talking about is so much more attractive all of a sudden.

SPEAKER_00 35:58

Yeah.

SPEAKER_03 35:59

Okay. So it's things like that. I liked what you said, how it's probably more so a second or third property play. The times that we may see someone do it on a first go is if they have a lower borrowing capacity, their purchase amount is smaller, and they're just kind of guns blazing, like they're ready to like get their teeth stuck into it. But you have to understand what kind of an investor you are.

SPEAKER_00 36:22

Yeah. So with the 600k budget here, um, you're gonna have a plethora of options for apartments. Because you have a 600k budget, we're gonna be focusing on two bedroom apartments, um, at least one bathroom, and then a car space, which is really important as well. Yeah. If you can park a car on the block, that's gonna be a massive benefit to the renter, increase your rental yield, and also to that future seller because we want to think about the person that's gonna want to buy this and live in it one day. And when you focus on those things, two bedrooms, car spot, bathroom, um, that's gonna be really appealing to that future buyer.

SPEAKER_03 37:03

Yeah, it's a great point. If we have a 600K purchase price, you should really be able to get whatever you want. You should be able to get a really quality property in a quality location for that 600k budget.

SPEAKER_00 37:16

Yes, definitely. And this, you can get some some beautifully renovated properties, like the one you're purchasing at the moment for a client in St. Kilda. Yep. Run us through that property and I guess what the person paid for it, yeah, what we're gonna buy it for, and then how the property looks.

SPEAKER_03 37:34

This one is an absolute ripper, guys. And I should probably I should really try to like explain how good of a property this is to the client. I'm not sure if he fully understands it, but anyway, it's um it's a two-bed, one bath, it's got one car uh in a boutique block of 15, I think, um, in a great spot. So it's not on a main road or anything like that. The vendors, the sellers, purchased the property for 630, 640, something along those lines. Um, and they bought it at auction because they liked how good this property looked. It'd been fully renovated, it's it's it just it looks schmick all the way top to bottom. Immaculate property. It's actually being used as an Airbnb right now, it's that nice. Anyway, they fell in love with it and they just they just bid at auction and they overpaid. And all of a sudden, if this is why you have to do your research and understand price points, two years later, three years later, when they want to sell the property, we're purchasing the property for like 100k less than what they paid. Yeah, purchasing the property for $540. We got um an uh offer accepted. So if you do your research, you understand what properties are worth, you can then feel confident in the purchase price, right? Yeah, these people clearly didn't understand what the property was worth and fell in love with the look of it, which don't get me wrong, it looks great, but it's that's not what it was worth. We can swoop in at a later date and get it for its actual value. Yeah, we come in and yeah, get a great property for the client, they are making quite a significant loss.

SPEAKER_00 39:13

Yeah, correct. And that's really good when buying an asset because we know if this person emotionally paid at auction, then we're gonna have the same appeal in the future. So if you decide to sell when the market's really hot, like this buyer bought in and you sell at auction, well, then you know you're going to probably get a price higher than what it's valued at, which with a 600k budget in the apartment space, you should be focusing on an asset like this. So that's it with the apartments. If we're gonna look at three asset types, they all have a case to be made for different buyers at different points in their portfolios. The ones we really like at the moment because of that price disparity is turn into the villa units and apartments. But again, for your first asset, there's still some great regional locations where you can get that house.

SPEAKER_03 40:08

Yeah, I I love them all. Honestly, I do love them all.

SPEAKER_00 40:12

Yeah, beautiful. Well, let's get into the rapid fire then Brody. So exciting, if you've only got 600k to invest, is a house even a realistic option or am I dreaming?

SPEAKER_03 40:28

Look, it is realistic. The time frame is running out, it is running out. But if you're you know, if you're listening to this in 2026 and you're open to buying regional, you can get yourself a decent block of land and a decent house.

SPEAKER_00 40:41

Yeah, you mentioned yields of six to seven and a half percent on Melbourne apartments. Does that sound too good to be true?

SPEAKER_03 40:50

No, it's definitely achievable. Um, you will have to do a little bit of hunting to make sure that everything stacks up because not all apartments just straight out the bat have great yields, yeah, but it's it's achievable.

SPEAKER_00 41:03

Yeah, very cool. Is buying regionally with a 600k budget a compromise or a smart play?

SPEAKER_03 41:11

No, I think it's a smart play. It's not a compromise. Um, you do have to compromise on some things, yeah, but I don't think it's a dumb play. It's definitely a smart play. Anytime you can get a land, uh sorry, if you can get good land value and a house that isn't, you know, run down or a shack, uh yeah, no, that's a smart play long term for sure.

SPEAKER_00 41:30

Yep. Land content keeps coming up. Why does it s matter so much for a tradey building a long-term portfolio?

SPEAKER_03 41:38

Well, yeah, we we've touched on it. It's security. So if you said this a few times, if this is the last and the first and last property you purchase, you want to make sure it has the best chance to perform over the long term and land out land is what appreciates, not the house. So the more land, the better your your options over long term. Here we go. Should your first investment property always be a house?

SPEAKER_00 42:06

Uh no, it shouldn't always be a house. Um, I think it makes the most sense, but when you have a villa unit where you can still get land content um and buy in a better location, for someone that's trying to minimize as much risk, um, a house doesn't have to be your first asset.

SPEAKER_03 42:24

All right, love it. If Melbourne apartments haven't grown in 10 to 15 years, why would they start now?

SPEAKER_00 42:32

For a few key reasons. You can't build apartments now for what you can currently buy them for. So developers, when they look at building a new block, they won't be able to sell those apartments. So they're not building them. So until the prices of the current stock catch up, we're not going to have more supply. And with a growing population, um, this is going to push more demand in. And when supply drops, that's when you have price growth come in.

SPEAKER_03 43:00

Yeah, that makes complete sense to me. With the first home buyers scheme pushing demand, which of these three assets benefit the most?

SPEAKER_00 43:11

I think in the short term, it's probably the villa units because as house prices become unaffordable, the next asset that people go to is that villa unit and then onto apartments. So I think it it does depend on the suburb and the pocket, but I think as a generalization, it's probably the villa units.

SPEAKER_03 43:34

Nice. Last one here. If you had 600k right now, which asset type would you buy and where?

SPEAKER_00 43:41

Well, it depends on where you're at in your portfolio. If you're just starting out, I think you go with the house. If you're uh you also have the option of the villa unit, but I would still rather go with the house. If you're buying property number two or three, I think looking at the apartment play at the moment is really strong just because of the market timing and the rental yields, as well as the tax changes on top of that. Perfect. Well, that's rapid fire done, my friend. Lovely. Well, thanks for tuning in. We'll catch you on the next one. Thanks, guys.