Property types: Buying an apartment or a house? Return and investment

Buying your first property! But which one? What type of property should you invest in first? Rather apartment types, house types or still commercial? Let’s briefly compare the different options to find the most profitable, uncomplicated entry into the topic of real estate investment. After the comparison, you will see that apartments are the easiest way to get started in real estate as an investment. That’s because there are 2 big risks for landlords: Back rent and vacancy. To minimize this risk, you should pay attention to the right type of property right from the start.

Buy a house? Risk: 100% ownership = cost

House – The own house, the home, for many the big goal when it comes to buying real estate. Whether it is for your own use or as an investment, you are the sole owner and thus also responsible for all investment costs when you buy a house.

No cost sharing, no apportionment to tenants

It is even more extreme with owner occupancy, because here you can not allocate costs to tenants. That owner-occupancy is the most expensive form of living, you have already learned in the article first buy property. After all, you are responsible for all costs, even later in retirement!

Operating costs and maintenance costs are always on you, even if the house has long been paid off. With a house, it quickly becomes expensive because, unlike an apartment where you are part of a community of owners, you bear 100% of the investment costs incurred.

Tip. Read the full comparison between house, apartment building, commercial and condominium, on my new project for real estate buyers ( here:

Perpetual investment costs – example: Heating system

You have just paid off your house and a year later you have to buy a new heating system. Let’s say this heating system costs 10,000, so your share is a full 10,000 (as 100% owner).

If you had a condo, in an apartment building, say with 10 units (apartments), of which you own one unit, you would only have to pay 1,000, or 10%.

Let’s say a year later there is major damage to the roof. Damage that has gradually developed and occurred over time. Another 10,000 in repair costs. As a homeowner, it all falls back on you again. If you were a condo owner, so again part of a homeowners association (apartment building with 10 units), only 1,000.

Rent-free in old age? An old house…

No tax breaks for landlords, no subsidies for creating housing, no apportionment to your tenants.

That as a simplified example.

Without further maintenance and management costs, you would have to pay 20,000 as an owner. So much for “rent-free in old age” as an owner-occupier.

No matter whether owner-occupancy or capital investment, for real estate beginners the condominium is profitable in many ways and rather than a house.

Buying multifamily housing: More risk and sources of danger

Multi-Family – With a multi-family home, you have the disadvantages of being a homeowner first, plus significantly higher investment costs when you buy a multi-family home.

More floor space, more living space, more tenants, more frontage, more risks.

Accordingly, you need to have more equity available to pay the purchase price, but also to pay for the overall, ongoing operations of the apartment building. And remember, there are 2 big risks for landlords: Back rent and vacancy. With more tenants, the risk potentiates, especially in C-location and B-minus locations.

For an apartment building as an investment, if we talk about real estate entry, you also need more knowledge and experience. Purchase price negotiations, the subsequent rental and said vacancy of individual units. You have to cope with that, from the know-how (new tenants with creditworthiness) and in financial terms (continuing loan payments).

Buy commercial property

Commercial – Commercial has several disadvantages, for real estate beginners, for one, the legal requirements are different, the requirements for the property but also the legal framework, such as leases. In addition, there is a higher risk of vacancy, with commercial tenants, due to higher turnover than with residential properties. You need to consider all of this when you buy a commercial property.

Either way, headquarters, multi-family, commercial, the easiest way to get started in real estate is condos!

Buying a condo:

Condo – If you happen to have already read through our guide on buying your first property, then you already know that condos are the easiest way to get started in real estate.

The “easiest” way to become a real estate investor.

Here is a brief summary once again:

As a rule, you need less equity capital, on the one hand for the purchase but also for the subsequent operation of the property.

You are part of a community of owners and accordingly the investment costs are shared between the parties.

Renting a condominium is manageable, unlike apartment buildings. Houses additionally have a very specific target group, mostly families. At the same time, demographics are trending more towards single households.

Accordingly, our tip, buy 1-2 room apartments!

Buying a house: House types at a glance

Especially when buying a property, there are many factors to consider and choosing the right type of house is essential, for returns (rental) and appreciation (investment). Learn more about buying a house and the different house types here.

House types in a list:

Buy an apartment: Types of apartments at a glance

The real estate market is almost endless, and the division of apartments is no exception. There are numerous types of apartments, all of which are differentiated from one another by a wide variety of factors. Read more about the topic here:

Here you will find an overview of the types of apartments:

Even more facts about houses, apartment buildings and flats can now be found on my new project for real estate buyers ( Types of real estate, buy a house or flat?