As an investor, your role is twofold, identifying the market which will achieve the strongest performance but also narrowing down to identify the right property within that market to ensure returns are maximised from both a rental and a resale perspective. To do this, it often requires you to remove the emotion from your decision. Don’t let familiarity cloud your decision making, looking outside of your local area can often yield the best results.
If there’s one thing we know, it’s that research should guide your decision making when it comes to property investment, not perception.
The second step is to find the right property. Whether this be a house, townhouse or apartment is dependant of many factors including demographics, proximity to CBD, household composition and much more. Your main objective is to identify the type of property than an owner occupier is most likely to find desirable. Engaging with the target market and appealing to the emotional owner occupier buyer will increase the likelihood of achieving the strong level of capital growth.
In this blog, we’ll take a look at what you should be keeping your eye out for if you’re buying an apartment.
Arguably the most important attribute of an apartment is its size. This determines how liveable an apartment is and is often the first thing noticed by a prospective tenant or purchaser. Our selection criteria ensures that our recommended one, two and three bedroom apartments are well above average sizes.
Investors are often drawn to lower entry price points for smaller properties that attract a strong yield. Despite these properties performing well from a cash flow perspective, you’re significantly limiting your exit strategy. Owner occupiers generally make up 70% of the market therefore appealing to them is critical. A 40sqm studio apartment won’t appeal to the emotional owner occupier market.
Our focus is on one-bedroom apartments between 50 and 65sqm internally and two-bedroom apartments between 75 and 95sqm internally.
The apartment size is critical to effectively designing a floor plan. The layout is also impacted by the dimensions, orientation and attributes of an actual site. For two-bedroom apartments, a layout which has bedrooms separated with is often most desired. This allows the flexibility for unrelated occupants to reside together. Below is an example of an ideal two-bedroom apartment design.
It offers a segregated kitchen, living and dining space. Both bedrooms have strong exposure to natural light and sit on opposite sides of the apartment. The main bedroom has a walk-in-robe and an ensuite and despite not having an ensuite in the second bedroom it’s strategically located to benefit that room. The balcony is providing a large, usable, outdoor space.
Similar considerations need to be taken into account for one and three bedroom apartments also. Understanding what the market desires will provide you with a competitive advantage.
Natural light was briefly touched on in the previous point however, it’s a critical aspect of apartment design. A bedroom must have access to natural light and ventilation for it to be recommended by us. The most common deterrent of apartment living is lack of space or light, this needs to be considered at the selection phase of your property investment. An apartment must have sufficient natural light in both living rooms and bedrooms.
The right aspect can vary based on location for climate reasons but also taking into consideration potential view lines. In hotter climates (Brisbane), west can be considered less desirable and in cooler climates (Melbourne) south can be considered undesirable lacking light and warmth.
Understanding this allows you to ensure you are purchasing the most desirable apartment within a particular suburb and development. It’s also important to understand the impact of particular view’s and how balance it out to achieve the most desired property.
Owner occupier ratio’s
The importance of owner occupier presence in a building is one which can’t be forgotten. It’s generally found that smaller, more boutique projects will inherit the strongest owner occupier appeal. Projects with more of an owner occupier presence will generally be taken care of properly but naturally have a high chance of attracting an owner occupier. The appeal of living in a building full of tenants or holiday lets such as Airbnb can be viewed as undesirable.
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