Apartments can be a great and affordable entry point for any first-time investors if they are not ready to invest in houses. When you have a more affordable price point that means that you will have more investment choices, particularly if you are an investor that has big savings and are looking to buy multiple apartments in order to create yourself a more diverse portfolio.
When you are looking to purchase apartments to be an investment, there are some rules that you have to be aware of. No matter what your budget is you have to make sure that you are choosing a good location, have a strategy as well as know investment-grade properties.
They Are Usually Easy to Afford
When it comes to investing in real estate it is capital intensive because it often requires a huge initial investment just to be able to purchase the property. So, if you are a beginner that has limited capital, you might want to invest in a cheap apartment that you will put up for rent.
Cheap apartments are a good starting investment option for cash investors. If the purchasing price is low enough, sometimes you will be able to make a cash purchase without having to do a mortgage. But, even if the property doesn’t meet the criteria, you can still be able to buy it. When you are purchasing a cheap apartment with a mortgage, the overall cost of financing the investment will also be much lower.
Supply And Demand
Depending on where you live different types of households will be common. In most places single to two-person households are the most common. There are a lot of lone-person households as well as single-parent families, which most likely means that they are low-income. With all that being taken into consideration, choosing something that is easier to afford and creating apartments that people will rent for the long term, rather than creating something luxurious and short-term.
Maintenance Costs And Upkeep
One of the biggest advantages of being one that owns an apartment or unit is that everyone in that building will share the cost of insurance, maintenance as well as upkeep in the form of a strata title. You will have to pay annual fees as well as special fees such as for construction contract administration services, etc.
They Have Potential For Multiple Assets
Even though it mostly depends on the size of your budget, sometimes you will be able to buy two apartments or units for the price of one house. That means that you will have something with a higher rental income as well as having lower risk and more flexibility, which will all make your portfolio more amazing.
Lower Land Value
Apartments generally have a lower proprietor of land and that means that you won’t have as much capital growth as a house would. Even though you will not make as much profit as you would if you sold a house, it will still be a significant amount of money that you will get from it. Keep in mind that things like location, market trends as well as proper characteristics will dictate the price.
Maintenance Costs And Upkeep
Even though when you are playing the body corporate fees will eliminate having to pay and figure out unplanned repairs, it can also be an expensive edition. That is especially the case if the complex that you have chosen has things like pools, gyms, or saunas. Always take those things into account. Sometimes it is less advisable to choose an apartment that is in an older building that doesn’t have those amenities and pays more for the apartment itself, than choosing a cheaper apartment in a building that has amenities.
Future Developments
Every year there are more and more units and apartments that are made in different areas, houses are being torn down and buildings are built instead of them. But that is not always that good because if you have invested in an apartment that is in an oversupplied area you will suffer from lower rental yields, demand, and not a lot of capital growth.
You, Will, Have Less Control for Alterations
When you invest in an apartment that means that you can play by your own rules, you will have to seek approval if you are looking for a major renovation. Because there is no land, you can’t make extensions like you would to owning a house. But that doesn’t mean that investing in an apartment isn’t for you.
The most important thing that you need to know is that property prices are constantly rising and it will only become more and more difficult to find a cheap apartment that they can turn into something that will be a return on investment. Keep in mind that not all chap properties that you see will be a profitable deal, always be sure in what you are investing in.
