December 4, 2018 | 6 key elements that make a good apartment investment
Apartment supply and investments are on the rise. In fact, the number of apartment development approvals is smashing economist expectations and this doesn’t look to be slowing. With this increase in supply and the media stating that apartment prices are falling, can this be seen as a risky investment?
At Beckett Property, minimising risk and maxismising opportunity in a residential apartment is largely about identifying “A-Grade” qualities. Below is an overview of 6 critical elements to consider before investing in an apartment.
1. Apartment Type
Boutique blocks with less than 20 apartments usually offer the highest capital growth potential. This is due to:
- The individual land content being higher per owner.
- Owners Corporation fees are lower (as there aren’t any gyms, pools or elevators to service).
- More scarcity.
- Less turnover or sales in the building.
- Higher percentage of owner occupiers as opposed to tenants which creates a stronger community.
Art Deco and post war era buildings create the highest demand due to their charm, size, scarcity, construction quality and location. A lot of these buildings are located in nice residential streetscapes and are usually only two or three levels in height. High density buildings are almost always located on main roads or in growth zones. They are also usually surrounded by similar buildings with risk of being built-out by another upcoming development. New apartment blocks have some advantages like higher tax depreciation, communal rooftops and modern amenities but these come at a high price through Owners Corporation fees.
2. Apartment Features
This involves the structure, size and feel of the apartment. Firstly, the floor plan must be symmetrical and ideally flow to an al fresco entertaining area met by a courtyard, terrace or balcony. Ceiling heights are important as they dramatically contribute to the feel and size. Bedroom sizes should be at least 3 x 3 metres and require storage or built in wardrobes. Kitchens can be either open-plan or separate to the dining area depending on your personal taste and requirements surrounding this. Bathroom sizes are important with separate toilets and ensuite being a huge advantage. Privacy should also be considered as no one likes a neighbour peeking into your domain.
Natural light is a huge factor and will make or break the desirability of an apartment. North and western orientation are most abundant. South and eastern orientation can suffice but it will depend on the building’s position and surrounds. Windows play a huge role, especially when it comes to bedrooms and bathrooms.
The acoustics of the building and apartment can often be an afterthought but should be considered. It is essential to assess the distance from the stairwell, basement car park or elevator to your apartment. Once again, your surroundings are important as you need to ensure there are no commercial or industrial buildings nearby that will create a lot of noise.
Off street parking in a non-negotiable when it comes to investing in an apartment. It doesn’t matter whether it is an open space, car port, lock up garage or a basement, do not buy an apartment without one. Car stackers are becoming more frequent in modern buildings but be weary as they can be a hassle and risk. Additional visitor car parks are also appealing and handy.
6. Location, location, location!
This is a deal breaker. Your apartment investment must be situated within 1.5km to your nearest train station, bus, tram, shopping centre, amenities and lifestyle. Both owner-occupiers and tenants require this convenience and apartments that are located too far from these amenities will struggle to sell, rent and will have limited capital growth.
Apartments offer many benefits including lower price points, secure living and minimal maintenance. It is crucial to vet your apartment investment with an eagle eye to ensure you don’t compromise your lifestyle or lose money with your investment.
If you would like to discuss the potential to invest in an apartment in Melbourne or seek the help of an expert Property Advocate, please speak to one of our trusted Buyers Advocates at Beckett Property. We will assist you with the successful acquisition of your next property.