Investing in Apartments

CityScape01-BlueMario Borg is a very good friend and a business partner of mine in the mortgage industry.  Apart from being an active property investor, he has extensive experience in investing in apartments.

This article by Mario gives his opinion on why apartments make good investments.  Here is what he’s got to say:

I regularly get asked the question, what makes a better investment?  A house on land, a townhouse, or an apartment?  Being an active property investor, I can share a few tips which may help you!

My best investment holdings have been (and still are) townhouses and apartments. If you want to make cash/profit, then house on land is a great strategy if you plan to subdivide and construct townhouses and/or apartments.  But remember this; your wealth is a measure of your holdings and it’s your holdings that will generate a passive income for you for when you retire.

However, beware not all apartments make good investments.  As a general rule I would recommend you stay away from off the plan purchases, studio or very small apartments, major/busy roads, high rises, and old titles such as stratum or company share.  Banks have strict rules when lending against any of these type of apartments which can cause you grief when trying to finance them.

Times are changing and if you are considering buying your next investment property, or if you are buying your first home (apartment) and want to make money along the way, then consider this.  In major capital cities like New York, Paris, London and Tokyo, high-density accommodation has been around for many years and is perceived as the norm.  Here in Australia our culture “was” based on backyards, BBQ’s and wide-open family spaces.

A demographic shift is occurring with more single person households and childless couples choosing to live in and around our major cities where employment and lifestyle factors are a big drawcard.  Even baby boomers are downsizing.  Baby boomers are also choosing to buy a home by the beach (or country) as well as an apartment close to the city for when visiting family and friends.

These factors are creating a massive demand for 1 and 2 bed apartments (in our major capital cities).

I believe that 1 and 2 bed apartments are set to soar over the coming decade as many Australians adjust their property purchases to what they can afford, with lifestyle choices taking precedence.

My “golden rules” for property investments are:

  • Buy close proximity to a major capital city (but not in the city)
  • Buy close to transport, social amenities and shops
  • Purchase price at or below the median price (a good exit strategy)
  • Buy what is and will be in demand for a very long time

One and 2 bedroom apartments will outperform due to our population growth and due to their demand (as stated above).  Government forecasts indicate that our population will grow by a further 25% between now and 2025.  That’s a massive increase!

Buy smart and seek professional advice if you’re not sure.

When making such a major purchase it may pay to utilise the services of a buyer’s agent as they generally follow a strict criteria of where to buy, what to buy and how much you should pay for it. Not to mention that many great buying opportunities don’t even make it to advertising (the hidden market).

Contact us to get advice on how you can fund the purchase of your next investment property.

If you wish to find out more about apartment investing, you can contact Mario at www.marioborg.com.au