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Determining the right apartment investment
As newly built apartments become more heavily scrutinised for quality, investors are becoming increasingly concerned about what they are buying and whether it is a safer investment to purchase an older apartment.
On a recent episode of The Smart Property Investment Show, property investor Alex Whitlock sheds some light for wanna-be apartment investors.
“First thing, you need to have a look at what your goals are. We all invest to make money, but I would have a look at short-term whether it’s a capital growth play or a cash neutral type area,” Mr Whitlock said.
The second thing investors need to look out for is vacancy rates to ensure they are not purchasing an undesirable apartment.
While vacancy rates are critical for all property investments, it is especially important for apartment buildings, Mr Whitlock highlighted.
“In the areas you’re trying to invest, I would have a look at vacancy rates and what type of assets are sitting vacant,” Mr Whitlock explained.
If investors are trying to solve whether to buy a new or an older apartment, Mr Whitlock advised investors to simply speak with real estate agents.
Asking questions such as “What kind of apartments rent the fastest?” “What kind of apartments tend to get the best rental returns?” and “What kind of apartments get the best tenants?”
Mr Whitlock explained that by asking these questions, investors will be able to understand what type of apartments in an area consumers are looking for, making investment decisions easier.
The property investor also highlighted the importance of looking at the assets associated with apartment buildings.
“I would say I’d be looking at whether they have, sort of whether they’re sort of high-rise apartments with lifts, with areas that require maintenance,” Mr Whitlock said.
Speaking from personal experience, Mr Whitlock said investors who have higher fees through body corps for maintaining lifts, public areas, pools and tennis courts can eat into returns.
“My cash flow was very, very poor from those particular properties,” Mr Whitlock concluded.
