There is plenty to say about purchasing apartments in today’s market. Most are negative as we lead straight into a complete saturation of apartments throughout the inner city of Melbourne. But this is where everyone gets it wrong, not all apartments are the same nor do they fall under the same category. Like all things worth investing into, you must research first to better understand what’s worth investing into.
So, first things first, high rise off the plan apartments. If you want to minimise your risk, I would be staying away from them. Off the plan purchase prices are usually a little top heavy and in most cases, once these buildings are complete, they drop down in price. There are so many high rises going up everywhere and that’s truly where the saturation lays. Developers seem to be a dime a dozen these days, so if you are contemplating purchasing in a high rise, make sure it’s with a top end developer who has a rich history in producing quality products and who continuously build landmark buildings. The other thing to always keep in your mind is to always by logically. Don’t buy a small space where they have squeezed in bedrooms and bathrooms, make sure the space suits the attributes ie. a two bedroom, two-bathroom apartment squeezed into sixty five or less square metres will leave you in a world of hurt when you’re trying to rent it out or sell it, it’s just too small.
Always try to buy into a block that has a history of sales, I personally like to work off a minimum of seven years. The reason being is every apartment block needs time to develop itself within the community and generally it takes around seven years for acceptance. Over that time, you are able to track how sales have gone, whether it depreciated from off the plan prices to completion resales through to third, fourth and fifth sales. It offers you a better insight of what’s instore for the future capital gains for the sales side and a strong history of rentals. This way you are always buying in the known and not the unknown and you should feel a lot more confident to invest.
Three areas that we like to specialise in are the three areas you should be looking. Heritage, landmark and boutique. Each of these provide a different value and only compete with other properties that are in the same category in both rentals and sales. They generally show to have great track records as far as growth goes and seem quite popular amongst buyers and renters in all markets. These buildings will be your safest bet, though the initial buy in may be a little more exy than the average apartment.
In the end, apartments generally provide a greater rental return than housing, so on rental front they’re worth creating a portfolio. Bear in mind that owner corporation fees are generally attached to these apartments so shop around to find blocks that have reasonable outgoings, in most cases the outgoings on an apartment usually falls in about the same amount of money spent on maintenance on houses throughout a year. Do you research, buy well and you will have strong growth in yield and capital for the years to come.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.