A lot of investors, especially first-timers, look to buy apartments before houses because they are more affordable.
The main decision these investors face is whether to go for a one or two bedroom dwelling, and on first instinct most investors aim for a two bedroom apartment.
There are arguments however that going for a one bedroomer could be just as good an investment and Greville Pabst compared the two options for WBP Property Group.
One of the reasons one bedroom investments could be a good idea is that they are in short supply. The demand for quality one bedroom units In good locations exceeds supply in Melbourne when you look at population and dwelling figures.
Demand for these one bedroom dwellings looks set to continue rising as the Australian baby boomer population ages. That should set off alarm bells for investors.
One situation investors might find themselves in is having to decide between a quality one bedroom apartment for around $500,000 or going for an inferior quality two bedroom apartment for a similar amount.
Investors instinctually might go for the two bedroom dwelling but the premium one bedroom apartment might actually, and often is, more desirable in the market. Investors need to weigh these comparisons up.
Another plus to one bedroom apartments is their potential rate of return which often matches that of two bedders even though their buying price is different.
The rental yield compared to price for one bedroom apartments often goes close to two bedroom apartments. To work out an apartment’s rental yield, simply calculate the rental income from the investment as a percentage of the property’s value.
With this in mind apartment investors are well advised to keep one bedroom options open when deciding on a unit dwelling purchase.