High vs. Low Price Property Strategy

High Price Properties

Advantages:

• Less number of properties to deal with
• Less ongoing soft costs such as bookkeeping, etc.
• Less work looking for them
• Usually in expensive suburbs that have solid growth performance
• More trustworthy tenants

Disadvantages:

• Luxury items get hit first during bad times
• High price properties in low price suburbs may have slower growth due to lack of demand
• Harder to get finance – lower leverage
• Higher stamp duty and land tax costs.

Low Price Properties

Advantages:

• More stable performance closer to the suburb's median price
• Lower price properties in established suburbs can handle downturns better
• Better diversification for rent and resell
• Lower stamp duty and land tax costs

Disadvantages:

• More work finding them
• More ongoing soft costs such as legal and accounting expenses
• Not as appealing to tenants
• Lower than usual rent if the property is too run down