Is it better to buy one expensive property or two cheaper properties when investing
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.
Today were going to talk about whether it’s better to buy one expensive property or two cheaper properties when investing.
Isn’t more of something better?
More food, more time, more money!
Therefore, wouldn’t more property be better?
Well, this really depends on what you are trying to do in my opinion.
Someone with a keen architectural eye, who wants to invest in a prime inner city suburb and oversee the renovation themselves.
Is very different to someone looking to build a property portfolio, through buy and hold and potential value adding strategies into the future.
The inner city renovator isn’t just an investor, they have an emotional connection to their property.
They get satisfaction from the process and any money made is a bonus.
Whereas the person wanting to build a portfolio, is purely interested in the numbers and return on investment.
I would argue it would make more sense to diversify on two cheaper ones, than one large purchase.
My argument is based on markets growing at different rates.
Therefore if you can pick the best markets, it makes sense to have more properties in these markets.
More property means multiple things when investing.
It means you can liquidate or sell a property in your portfolio in the best performing market when required.
It means your portfolio will take advantage of differing growth cycles.
It means your rental returns or yields will often be higher than the expensive property.
One important point is I wouldn’t recommend just buying any cheap property for the sack of it being cheap.
The property needs to make sense for the local market, and meet the demand of the local community.
For example a 1 bedroom unit in an area with 80% families, will probably not make too much sense.
All in all, more properties are generally better for investors portfolios in my opinion.”