Achieve the Maximum by Utilizing the Correct Investment Strategy
When considering the purchase of an apartment as an investment property the following tips will help to achieve the most from the investment strategy.
In Australia apartments are generally cheaper than houses. Websites of the Australian Bureau of Statistics and the News.com.au have many charts showing the median prices of houses and apartments in metropolitan areas and regional areas.
Unlike house owners who own the land on which the house is built, apartment owners do not have ownership of the land.However, if the decision is made to buy an apartment as an investment property, then the following should help with the strategy.
It is also common practice for individuals to buy a single apartment in a complex rather than purchase the entire complex.
The Location of the Apartment
Whether buying a house or an apartment, the location is still an important consideration. The location will also depend on the type of tenant that one is planning to attract.
For instance, an inner-city apartment with close proximity to public transport, restaurants and other entertainment complexes will be more appealing to singles and couples than an apartment in the outer suburbs. On the other hand, a young family will look for an apartment close to schools, parks and other facilities for young children.
Apartment Vs House – Advantages to the Landlord
- An apartment is cheaper to buy than a house.
- No external grounds to maintain- no mowing, weeding or watering.
- No fences to erect or mend.
- Depending on the apartment complex, the availability of a pool, a BBQ area, a gym, etc to be used by the occupants of all the apartments will be attractive to prospective tenants.
Tenants Looking for a ‘Lifestyle’
Most apartment dwellers are looking for a lifestyle.
The requirements may slightly vary depending on whether the tenants are singles, a couple or a young family.
In general they are:
- close proximity to public transport, restaurants, shopping and other recreational facilities.
- no regular outdoor maintenance- no gardening, mowing or cleaning a pool.
- fully maintained communal facilities such as a BBQ area, swimming pool and gym.
Fully Furnished, Partly Furnished or Unfurnished Apartments
This is another area in which the landlord has to make a decision prior to renting the property.
- Fully Furnished – Whilst this could be a very costly exercise it can attract a higher rental. It will also mean that there will be regular maintenance and replacement costs to consider. Singles and young couples will find fully furnished apartments very appealing.
- Partly Furnished – Some tenants will prefer this as they have their own items of furniture, etc. that they would like to be surrounded with. This will also reduce the necessity for some of the maintenance on the part of the landlord.
- Unfurnished – Young families would prefer this option because more often than not they would have accumulated their own home contents. The landlord’s responsibility will be reduced to the maintenance of the fixtures only.
Investors in an apartment should also be involved in the body corporate to ensure that their ideas and opinions on the running of the complex are heard.
The body corporate is a committee that overseas the running of the complex in relation to the areas that are common to all landlords.
For example, the body corporate usually controls the areas such as insurance, maintenance costs of shared areas, paying of rates and taxes and other aspects of common interest to all landlords.