1. Bedrooms and floor space
The more bedrooms and the larger the floor space the better. If you’re looking for a two-bedroom unit, look at buying something above 80m2, and above 110m2 for a three-bedroom unit. More bedrooms mean that as an investor you can charge more rent, and your tenants can split the rent further to reduce their costs.
“The more bedrooms, the better it is in terms of affordability,” says Rich Harvey. “Two-bedroom units are in high demand, but I always think the larger the unit the better because construction costs are going up.”
The position of the unit in the building is the next element you need to look at. If your unit is in a quiet suburb, your tenants or buyers will probably be young families or empty nesters. These types of tenants or buyers will be looking for an easily accessible but safe, smaller apartment block with a unit on the first two floors.
Renting families are likely to expect that the apartment has its own garage or allocated parking spot. They may also pay more for a home with a good view of the city, water or surrounding suburbs.
If you are looking to buy in an active inner city apartment block, you will most probably be renting your unit to young professionals. In the upper end markets these tenants will pay for good views, but in the general tenant market, any level of the building would suffice.
Peter Koulizos, author of Top Australian Suburbs, believes that no matter who your market is, the ground floor of a unit complex is by far the best decision for an investor. “Some people would argue with me but I would say ground floor is best from a landlord’s perspective because you don’t eliminate any of your market. If you go above ground floor you eliminate the older generation who don’t want to go up the stairs, or people with young kids,” he says.
Property experts agree that an apartment facing towards the north and away from the road would make a highly desirable unit in the right area. This type of unit would receive good air flow and minimal noise from traffic.
A unit which is newer or has been renovated to incorporate modern open plan living will also be attractive to tenants and owner-occupiers. Look for an apartment which provides plenty of natural light and areas which can be used to entertain and relax.
Investors should be looking to buy established dwellings with character details as these properties will return higher capital growth due to their individual designs, says Koulizos. “I am talking about anything up until art deco or WWII – before then is classified as ‘character’. They were built with higher ceilings and more solidly, and they look nicer than the new high-rise apartments,” Koulizos explains.
As an owner-occupier, you may be better off buying a newer apartment as it is less likely to have major problems and there is generally less maintenance involved.