Stalling property prices and the promise of falling interest rates is luring many investors back into the property market. If you’re one of them and you’re considering a unit investment, we show you exactly what to look for.
Apartments offer an affordable entry point into the property market, but there are “many critical factors to consider” before you take the plunge, says buyers agent Michael Fenech.
Fenech buys dozens of apartments and houses each year on behalf of his clients, and over the years he has crafted a checklist of features that he looks for when searching for a quality apartment investment. In no particular order, he shares his top 9 tips for investing in units:
1. Access
“Put yourself in the tenants shoes and ask yourself… Would I want to pay rent and live here?” he says. “Buy in locations where tenants want to live, close to lifestyle areas where you are walking distance to cafes, shops and beaches.”
2. Location
“You should always purchase in major cities if you can, and try and avoid buying in rural areas or mining towns,” Fenech advises, because capital growth is generally stronger in bigger cities.
3. Boutique
Avoid buying in large developments with hundreds of properties in the complex, as you lose any unique factor. “Go for boutique blocks of apartments with a maximum of 18 units.”
4. Walk up
“Always avoid apartments where you have to walk down to get access, as these types of apartments are generally quite dark,” Fenech advises.
5. Parking
If your budget permits, buy an apartment with a lock up garage or car space. It might cost an extra $20 or $30 a week in mortgage repayments, but you’ll more than recuperate that amount in extra rent.
6. Size
When buying a one-bedroom unit, make sure it is bigger than 50 square metres internally; you may have trouble access finance from the bank if the property is any smaller than this. “You can check the unit’s size on the strata plan, which should be included in the contract,” he says.
7. Renovate
If you have the budget, Fenech recommends you renovate – or at least refresh – the property, to maximise your rental return.
8. Research
“Do your research and look around the area to see what other apartments have been selling for,” he says. “You need to know what the market is prepared to pay for each different type of apartment, which may help you forecast more accurately what level of rent you can expect.”
9. Title
Try and avoid apartments that are company titled; the rules of ownership are more complex, so stick to strata titled apartments if you can.
