Size does matter

A unit can be a sound investment, but with so many styles of units available, it can be hard to determine which will provide the greatest return for you.

There are pros and cons associated with each purchasing decision.

Ultimately, one of the most important factors to consider before purchasing a unit is its location.
A well positioned unit does present many advantages and often provides very attractive returns. If you need assistance researching the market, as a broker I can help you access property reports and other related information.

Moreover, investors should make sure they buy in a block that is well positioned, desirable and well-maintained.

With these key points in mind you can start to consider the style of unit that best suits your needs. Here are some of the pros and cons with each:

STUDIO APARTMENTS
• Pros
A new demand is emerging for accommodation that services career oriented, single people and independent retirees.
Escalating levels of divorce and separation are also fuelling demand for trouble-free affordable accommodation, and studios are becoming increasingly attractive to both young and older Australians. This can help ensure strong interest from tenants and potential rental returns.

• Cons
The main disadvantage of a studio flat – other than its size – is that it may not rise as quickly in price as one and two bedroom units. Moreover, mortgage lenders’ acceptance of studio apartments as security has traditionally not been as strong as one and two bedroom units, potentially making securing financing more difficult.

ONE BEDROOM APARTMENTS
• Pros
Investors should expect to see a high rental return and should not have too much of a problem sourcing tenants for the property, provided it is close to the inner city. A one bedroom unit is generally larger than a studio apartment and can therefore command a greater rental fee from the occupant/s.

• Cons
Data from Residex has found that many young professionals today are looking for a unit that has two or more bedrooms, so that they can use the second one as a study or work studio.
In addition, renters sometimes seek a property that can fit into any future lifestyle changes, e.g. having a child, which may result in the ending of their tenancy.

TWO BEDROOM APARTMENTS
• Pros
Two bedroom units usually achieve the highest rental return for investors. And provided they are located near water, close to the city, or in an overall good location near transport, shops and schools, finding occupants is generally easy. Additionally, two bedroom units usually have a greater resale value.

• Cons
Two bedroom apartments are traditionally more expensive than one bedroom or studio apartments; the entry level price is therefore higher and can be a barrier for some buyers.
Remember, while there are differences to each type of unit, your investment selection will most probably be dictated by how much you’re able to comfortably borrow and service. If you’d like to explore your investment options and borrowing capacity give me a call.