Clad or Timber Houses For An Investment Property?
Dilleen Property Group 2021
This is a very common question that I get asked, and the truth is that I have personally bought houses that I own in my investment portfolio that are clad builds or fibro and timber structures.
A lot of investors only want to purchase brick houses primarily because they're less maintenance. However, what I've found out over the years is that there's a lot of people that make up things and say they don’t purchase clad/timber houses because they are more maintenance, they cost more, they're not sturdy, or they're going to fall over.
If you're looking to grow an investment property portfolio and continue expanding, I personally believe that it is perfectly fine to buy a timber structure or a clad style house. It ultimately depends on your goals and whether you want to continue building a portfolio and getting multiple investment properties to create that passive income.
From my experience you have to diversify your portfolio. You can't only buy houses. You have to buy an array of properties including houses, townhouses and sometimes even units, because in general houses have a lower rental yield.
Sometimes you'll find houses that are clad are amazing deals. They might be below market value, have a great rental return, and they may even have a lot of growth potential on the land that they're on. I don't believe a person should rule out clad or timber style structure houses just because they believe they could be more maintenance as opposed to a brick house.
A lot of property investors or even buyers agents say they just judge things and give them yes or no answers. What I've learned over the years is that there is never a yes-or-no answer, it always depends on the situation.
If someone was adamant they didn't want to buy a timber or clad house because they think that it's going to cost more maintenance as opposed to a brick house, it depends on the situation. As an example I've spoken to people and I said all right you don't want to buy timber or clad structures over a house because you believe will be low maintenance, however would you buy a timber clad house if it was $50,000 below market value? Would that be worth it to you would you to say no to $50,000 in the hand right now because you believe the long term costs of holding this property might be more than buying a brick house?
It always depends on the situation and it always depends on how that property is going to help you get to the next property. Diversification is key if you're going to buy multiple properties. As you grow a portfolio if you're looking to get 8, 9, 10 properties, you're going to have to diversify at some stage.
To summarise there's no right or wrong answer with buying a clad house or timber structured house. I believe you've got to do your research and do your due diligence. Always make sure that you're buying properties that stick to the key three factors:
1. Buying below market value
2. Huge upside for growth
3. High rental return within a metro area
Remember, diversification is key!
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
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