4 Jul 2011
Investors tend to look to apartments for financial security because they don’t require as much maintenance as houses do, but there are things to consider with apartment investing, so here are some of the basics:
Location is the key. You have to make sure that the area yields a high rental population and good monetary returns. Suburbs near each other may fluctuate in rental prices, so it’s best to ensure you’re in the area that people can afford, yet that also has reasonable returns. City, coastal and suburban are all popular places to invest in apartments.
The type of apartment is also something you need to look at closely – if there are a lot of families renting in the area, a single bedroom or studio may not be popular and may be on the market longer. If there are a lot of single professional type people, then that type of property would be snapped up in no time. Newer apartments generally appeal to younger renters, but any aged property that is well maintained and presents well should attract quality tenants. Newer properties also have higher depreciation which can benefit investors at tax time, but you should weigh up whether this is going to be more beneficial financially than purchasing an older (possibly cheaper) property.
What facilities does the apartment complex offer? Complexes with resident and visitor parking, BBQ, pool and gym facilities and that are close to local shops and amenities always add value and appeal.
Make sure you’re aware of the applicable strata or body corporate costs and sinking funds. These are annual costs that you should build into your budget. Newer apartment complexes may have lower sinking funds because the likelihood of maintenance is lower than in older buildings, but they may have higher strata or body corporate fees, so make sure you have all of the figures before committing to anything.
If you’d like some more tips on investing in apartments, please leave me a comment or contact me directly.