The factors to consider in choosing to invest in apartments over houses?
If you’re hoping to invest in a property in one of the cheapest places to live in Australia, have you decided on an apartment or a house?
Although we are living through uncertain times at the moment, one thing we can be sure about is that the growing trend towards apartment living over houses is continuing to grow and I predict will do so well beyond COVID-19. It all comes down to owners and renters looking for what I like to call ‘rightsizing’. Convenience, low maintenance with some perks and features are what Australian’s are looking for.
Apartments have a few bonuses over houses. For owners, the property is generally easier to maintain as they pay levies to ensure the apartment building itself is well looked after. For investors, they can generally buy substantially more apartments before being hit with land tax in comparison to house purchases.
There are five key factors that you need to take into consideration prior to purchasing an owner occupied or investment property that will appeal to the right tenants. They include:
In Sydney for example, areas such as Circular Quay and Barangaroo are undergoing huge transformations and purchasing established apartments in these areas is predicted to result in really exciting capital growth once the areas are finished. We are currently selling 2306/168 Kent Street, Sydney at a price guide of $1.65 million with parking that is adjacent to Barangaroo where 1 bedroom apartments off the plan without parking have been reported to have been sold for $3 million.
The building’s location as well as its proximity to amenities such as shops, transport, beaches, parks, libraries and open space are factors that should also be high on your shopping list. Also essential is the location of the apartment within the building. Consider the way it faces, whether it’s near the elevator or garage doors and where the parking and bins are. Is there thoroughfare near your bedroom? Is it a three-story walk-up block? These are just a few of the questions you should ask yourself before committing to an apartment. All the above should be considered as part of the overall proposition and used to help determine the value of the property.
2. Building Amenities:
People wanting to live in apartments, whether they are buyers or tenants, are seeking convenience and features. They want pools, gyms and concierges in their building, and they want to be able to walk to shops cafes restaurants and work. A key watch out is to look out for unkempt communal areas – which can be a sign that the building is poorly maintained or is lacking the appropriate funds to manage the upkeep of the common areas. Investigate the security and privacy measures at open homes such as its security doors, cameras, any key-less entry, lighting in walkways, and the strength of locks and door frames. First impressions count.
3. Vertical Communities:
When living in an apartment building you need to think of it as a vertical community. As best you can, try and get an understanding of the demographic of the building. By understanding its culture and gaining insight into the type of vibe it has can really help to determine whether it suits your personality and lifestyle needs. To do this, ask for information such as; the percentage of apartment owners that are investors versus owner-occupants, who is building manager, concierge and members of the strata committee. Finally, take the time to understand the by-laws, the requirements of owners as well as any rules in place for noise, pets and communal areas.
4. Aspect and Layout:
It is important for buyers to look at how a view can change due to future development, consider which areas may be redeveloped and how that would impact the property from general view to natural light and privacy. However, more important is the aspect. Things to think about are; the light in winter and the sun in summer, cross ventilation and breeze, as well as the orientation of the bedrooms to common areas, neighbours and living spaces. A floorplan is a must to take these things into consideration as it will help you to identify which direction is north and then work out where the sun will rise and fall. Try to visit the property at your favourite time of day, if you’re an earlier riser or prefer a sunset view this is a great way to avoid any disappointment when you move in.
5. Strata Title:
It is crucial to instruct a strata search agent to conduct a report to be across any upcoming special levies, to check the levels of the sinking fund and general information about the building itself. Strata laws can be difficult to understand, so you have any questions, always ask! When budgeting, make sure you’re including the various regular fees incurred, but also plan for future improvements when buying into such schemes. Don’t be turned off by the annual levy, when factoring in the costs of maintenance, insurance, security and services for a single dwelling, they can often represent great value. And remember, all buildings require maintenance from time to time whether it’s an apartment building or a standalone house, so try to ascertain how the body corporate is managing issues as this is more important than the issue itself.
I hope you’ve found this helpful – we specialise in apartment living so feel free to contact me anytime if you’re thinking of buying or selling in the Sydney City market.