8 Tips for Apartment Investment Success

February 3, 2017

8 Tips for Apartment Investment Success

When it comes apartment investment, not all properties are equal. Some apartments represent value for money, with strong capital growth and rental returns. However, others underperform and are money pits. So, how can you avoid buying the later? Here’s eight tips to get you started.

1. Review Supply and Demand

Before you buy any apartment, you need to consider how many similar properties surround it. You also need to assess how many alike properties will be built nearby. Overlooking these aspects could make it harder for you to rent the property for the price you want. Plus, the value of the property will be slow to appreciate.

2. Consider Your Borrowing Options

At present, lending criteria is stricter than ever. The Australian Prudential Regulation Authority (APRA) have tightened lending guidelines and lenders are also aware of apartment gluts. Hence, before you look to buy an apartment, discuss your plans with your lender or broker. Then, get loan pre-approval to ensure you can buy the type of property you’re seeking to purchase. Otherwise, you may find financing your purchase difficult.

3. Know Where Apartment Investment Gluts Are

Do extensive research, before buying. This information will help you avoid purchasing an apartment investment that doesn’t perform well. Also, it will uncover any over supplied areas, so you can sidestep these.

4. Talk to Local Real Estate Agents

Make sure you contact local real estate agents when looking to buy. These agents are a wealth of information, and they will help you find the right property. Ask local agents about apartment sales in the area. Additionally, enquire about how many apartments they have listed and recently sold, and what’s about to come on the market. This information will give you an indication of whether specific markets are flooded with apartments or not.

5. Consider Buying Established Apartments

There are hundreds of off-the-plan developments in the pipeline. Melbourne and Sydney have many. While these may be attractive because they are new, don’t overlook established property. Often established apartments are in smaller groups. In addition, these properties are ready to move into, so you can start renting them immediately. Finding the right established apartment for you is just a matter of doing research.

6. Buy from Reputable Developers

Many developments, particularly in Melbourne, are built by overseas developers. Some are said to be poorly constructed and planned. To avoid any issues, ask about the history of the developer. Enquire out about other developments they’ve built and ask for addresses, so you can then visit these developments. This strategy will ensure you find a reputable developer and a well-built apartment that is durable.

7. Search for Quality

You want your apartment investment to be sturdy, so it requires little maintenance. Likewise, you also need your fixtures and fittings to last. Lastly, you want to depreciate as much as you can to give you the greatest tax benefits. As a result, look for a quality investment, rather than the cheapest.

8. Look for the Unique

Whether you’re buying an off-the-plan property or established apartment, then look for a point of difference. After all you don’t want your apartment to be like all the others. Rather, you want your apartment to have unique characteristics that are a drawcard for tenants.

Thinking of expanding your investment portfolio? Refinancing can help you access equity in your home. Get your free Refinancing Report and find out your potential savings, lowest interest rate, and receive a free home loan consultation.

Written by Refinancing.com.au

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