Are you considering adding an apartment to your property investment portfolio
The savviest investors are often always hunting for that next big opportunity. When the chance comes to expand your property portfolio, investors often jump at the opportunity with real excitement.
When deciding to invest in an apartment (also called a unit) or house, you should choose a property that fits in with your investment goals and plans. The affordability of a property will also determine whether a potential purchase is viable for you.
While rental performance can vary, houses are generally more expensive to purchase. Therefore, most investors tend to start out with an apartment as their first step into property investment.
Domain as of last year, listed the national median price of a house as $773,635 while a units were $539,256.
Rental yields nationally, on average as of February, have hit 5% and outperform houses which sit at 4%.
Apartment yields in Melbourne outperformed houses 4% to 2.8% respectively.
Sydney saw apartments have an average yield of 3.6% compared to a 2.7% yield from a house.
Brisbane, which sees higher yields, has apartments at 5.3% and houses at 3.8%.
What to look for
If your heart is set on increasing your portfolio and it is an apartment you wish to buy, you should start by researching suburbs with high growth potential. This is one of the best ways you can maximise your return on investment in the least amount of time.
The secret is to find an area with as many things going for it as possible, such as:
High population growth that can drive demand for rentals
Government investment in local infrastructure like new transport
Suburbs where the rental yields have recently increased
Areas where median household growth is outpacing inflation.
Lower housing supply with high buying demand.
Things to note
When it comes to any property purchase, you should never buy based on emotion. It is best practice to see beyond what your heart is telling you and consider concrete facts like price, location and possible returns. Will this property actually make you money?
Next, research whether there is any potential for growth of the suburb in the near future. Established suburbs with no major development projects on the horizon are simply not going to have the potential to produce the same returns as somewhere with these sorts of things present.
The key to a successful purchase is research. Doing so gives you the best chance of success through understanding the inner workings of the local market.
A dream apartment investment will have a good asking price with good rental yields and low vacancy rates.
The number of Australians living in apartments has grown and grown in the last decade. However, in certain areas the number of developments has outweighed the demand for people looking to live in apartments.
This has most recently been seen across some the of the Australians capitals.
Some key signs of market oversupply are:
Lower sales prices
Increased vacancy rates
Reduced in rental prices and rates.
Is it for you?
As with any investment, do your due diligence. Do your own research, talk with experts and weigh up all your findings.
If you are in the market for an apartment as an investment or in the market in general, contact a sales expert at Little Real Estate today for fantastic help in your sales journey.