Interest-only investment term about to expire? Here are your options
If your investment only term is coming to an end, it’s important to plan ahead. Learn more about your options so you c...
Promoted by St Dane Property Solutions.
It’s often assumed one-bedroom apartments underperform as investment properties. However, in the quest for wealth creation, you best be careful making assumptions.
Some common advice you may hear from your local mortgage broker is that two, or three-bedroom apartments consistently outperform one-bedroom apartments in rental and capital growth. But put simply, the evidence just doesn’t support this.
Societal changes, such as the strong trend towards more people choosing to live alone, means demand for one-bedroom apartments is increasing. And it is not just young first-home buyers. This is happening in all age groups – whether older adults are perhaps widowed, divorced or downsizing.
In the 2016 census, single-person homes represented an unprecedented 25 per cent of all Australian households and the ABS predicts the number will increase to 1.7 million people over the next 20 years.
From a property investment point of view, this is good news as most seasoned residential investors would prefer a diversified portfolio of four or five properties than own one larger property.
One-bedroom apartments allow investors to diversify their assets and minimise risk. Experts say that it is usually a preferable investment strategy to have, for example, three one-bedroom apartments in three different suburbs rather than one large apartment or house.
Lower buy-in costs for one-bedroom units also means they provide a greater rate of return in gross rent, in percentage terms, compared to larger dwellings, and upkeep on a one-bedroom apartment is substantially lower than a larger property.
Another factor to consider is that, as property prices continue to rise, one-bedrooms are in demand for their comparative affordability and this will be an advantage when you are ready to sell.
However, you need to carefully choose the type of apartment and the location. Any apartment, large or small, will only appeal if it is well designed, has abundant natural light and is part of an attractive complex. As for location, most renters are after lifestyle and convenience – a location packed with amenity, close to the pastimes they enjoy and close to where they work.
Inner-city precincts with cafes, restaurants, mainstream and speciality shopping, and with good transport links, are proven rental winners.
Shared facilities in the apartment building, such as a pool, gym, outdoor cinema or barbecue area are all very appealing to people who live alone, as they present an easy way to meet the neighbours and entertain friends. A further evolution is the shared dining room and kitchen, which allows apartment dwellers to entertain numbers of guests.
St Dane Property Solutions has partnerships with tier 1 developers across Australia and has pre-market access to exceptional apartments, townhouse and house-and-land packages. They can help you buy the right property, at the right price, at the right time: https://stdaneproperty.com.au