Thinking about buying a unit? Be sure to consider these specific details that can help you refine your search and improve the desirability of your property.
Bedrooms and floor space
The more bedrooms and the larger the floor space the better. If you’re looking for a 1-bedder, look for floor area more of at least 50 m2, for a two-bedroom unit, look at buying something above 80m2, and above 110m2 for a three-bedroom unit.
More bedrooms mean that as an investor you can charge more rent, and your tenants can split the rent further to reduce their costs.
However, it depends on the dominant demographic in your chosen suburb. Many single professionals prefer to live on their own rather than share so 1 or 2 bedders could be a better option. It’s also more affordable to buy them.
The position of the unit in the building is the next element you need to look at. If your unit is in a quiet suburb, your tenants or buyers will probably be young families or empty nesters.
These types of tenants or buyers will be looking for an easily accessible but safe, smaller apartment block with a unit on the first two floors.
Renting families are likely to expect that the apartment has its own garage or allocated parking spot. They may also pay more for a home with a good view of the city, water or surrounding suburbs.
If you are looking to buy in an active inner city apartment block, you will most probably be renting your unit to young professionals. In the upper end markets these tenants will pay for good views, but in the general tenant market, any level of the building would suffice.
Ground floor level is often a tricky option as it’s not the easiest to sell, although it can be attractive to older renters who don’t want to go up the stairs or people with young kids. However for single women renters, this poses some potential security risks due to possible break ins.
Property experts agree that an apartment facing towards the north and away from the road would make a highly desirable unit in the right area. This type of unit would receive good air flow and minimal noise from traffic.
A unit which is newer or has been renovated to incorporate modern open plan living will also be attractive to tenants and owner-occupiers. Look for an apartment which provides plenty of natural light and areas which can be used to entertain and relax.
Investors should be looking to buy established dwellings with character details as these properties will return higher capital growth due to their individual designs. They are often built with higher ceilings and more solidly, and they look nicer than the new high-rise apartments. However, there’s potential for higher maintenance cost as well.
As an owner-occupier, you may be better off buying a newer apartment as it is less likely to have major problems and there is generally less maintenance involved.
Number of apartments in the block
Ben Kingsley, CEO of the property and financial advisory firm Empower Wealth says the best unit investments are those that are well located in smaller blocks of apartments with quick transport to major employment, as well as great lifestyle elements.
The reasons for this are threefold:
- An owner in a small block will own a greater percentage of the land value and it’s the land value which appreciates.
- Medium and high density blocks have much higher running costs (such as maintaining lifts, pools, general maintenance) so your income returns are less.
- You don’t have as much scarcity value in medium to high rise property. These types of properties are located in zoning areas that provision for many high density dwellings so owners are more susceptible to the higher probability of forced sales or oversupply periods, impacting their capital gain potential.
Andrew Crossley is one of Your Investment Property’s
Investor of the Year winners from 2012, and the author of Property Investing Made Simple
agrees and adds that it’s best to target boutique developments limited to 8-12 in number, which are the only kind he buys.
“Never would I entertain buying in a 63 storey building with 100’s of units, no matter the location.”
However, Crossley believes the location is extremely important in the sense that some suburbs are more suited to units than other, as it’s all about meeting the desires of the target demographic.
“In Queensland, for example, I would prefer a house in Toowoomba and a unit on the Gold Coast.
“Generally though, units offer more convenience and proximity to transport and infrastructure than houses.”
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker