Buying house and land can feel unrealistic for many, so rather than going all in on house and land – lots of people are looking to buy an apartment as their first home or investment. We sat down with Antoinette Sagaria, Buyers Advocate from our very own Entourage Property, to get her thoughts on buying apartments over houses.
When it comes to any investment, quite often the major thing that determines its value is good old supply and demand – the same applies to apartments. Building approvals for dwellings (excluding houses) in Melbourne has averaged around 2,100 approvals per month in the year to April 2020 (Source: ABS). Given the ample supply in one main sector of the marketplace, Antoinette believes there’s significant opportunity to buy well in the apartment space provided you know what you’re looking for.
Antoinette’s top apartment buying tips are:
Location, location, location
Location is the most important thing when purchasing an apartment (or any property really). Buying an apartment within the inner ring of suburbs of Melbourne, close to transport and local amenities will always be the better option. Buying in the CBD or conversely far out in the suburbs may impact capital growth and in turn, your return on investment.
Check the internal size
What’s the internal footage of the apartment? If you need finance, some lenders won’t offer a home loan if the apartment is less than 50sqm. This generally doesn’t include balconies or car spots so it’s important to check the internal space and do your own research rather than just taking the agent’s word.
Additionally, you should consider the liveability of such a small space. Will it be large enough to fit your furniture and belongings in, does it have space for pets, entertaining friends – does the floor plan and layout make sense. How you live within the space is just as important as the location.
Avoid high density
Steer clear of brand new builds that are considered to be high density and especially any building that has a car stacker or amenities that you’re unlikely to use regularly such as gyms, pools and recreation rooms. They are very costly to maintain and this will be reflected in the owners corporation fees.
Look at medium to low density
Instead, focus on older medium to low density buildings built in the early 2000’s all the way back to art deco and beyond! These typically to have much lower body corporate fees as they don’t have costly items like stackers and lifts. They also tend to have a more traditional floorplan and quality construction. Back in the day they used to use premium products like bricks!!
What’s the tenancy to owner occupied ratio in the building?
Ideally you want to have over half the residents in the building being owners. Owners tend to care for their home and investment more carefully than tenants so it makes sense to aim for a building full of people who care as much as you do.
Who is going to live in the apartment?
Always think about who is going to be living in the apartment. Do you want to live in the property yourself or is it an investment? What is going to be important to that person? If it’s a small two bedroom apartment that’s likely to attract younger tenants that are just starting out, then they’re going to appreciate being close to transport over perhaps a river view which might be costly and unnecessary if that’s not the type of tenant you want.
And some things to think about when it comes to features, floor plans and architecture:
- The building architecture is important as it’s going to determine how you or your tenant lives in the building. How many flights of stairs are you going to carry your shopping up before it’s not fun anymore? Do all the window open? Do all the doors open without hitting cabinetry or the toilet? These sorts of things make all the difference to the growth potential of the property.
- Low to medium density is the go. As a rule of thumb we like to stay under 20 apartments in a complex where possible.
- Take into consideration the natural light in the apartment. Agents often turn all the lights on before anyone inspects so it looks like, but if the windows all face east for instance you’re only going to get light in the morning.
- The floorplan is crucial. Is your toilet door just off the kitchen? Do your guests have to go through your bedroom to use the only bathroom?
Remember; this could be the most money you’re ever going to spend in a single transaction so make it an informed decision and money well spent.
Buying an apartment soon? Get in touch with Entourage so we can review your finance options, particularly if you are buying a small apartment or off the plan. Or if you want to look outside of the basics, our buyer’s agents can take you through some beautiful apartments that you may not have considered.