A Property blog by Paul Bennion.
One bedroom apartments are generally favoured by rookie investors as their first step on the property investment ladder.
A review of tax depreciation schedules that DEPPRO has completed for first time investors during 2015 reveals that a high proportion of them are for one bedroom apartments.
Rookie property investors are attracted to purchasing one bedroom apartments for a number of reasons.
Firstly, they offer a lower cost entry point into the property market compared to buying a larger property.
For first time investors with limited financial resources, this is an attractive option especially if the apartment is located in an area with high capital growth potential.
Another attraction of one bedroom apartments is because there is a high demand for this type of rental accommodation as more people are living alone today due to major demographic changes in our society over recent years.
These two factors – lower price entry cost plus high rental demand – mean that rental returns for one bedroom apartments are very favourable for rookie investors.
Buying a lower priced property such as a one bedroom apartment also gives new investors experience in the property market while at same time not financially over committing themselves.
In addition, new one bedroom apartments also deliver first time investors generous tax deprecation benefits that assists with the overall cash flow of the holding the property.
Developers are responding to this demand with new apartment complexes now having a greater proportion of one bedroom apartments compared to a decade ago.
If you are considering buying an investment property for the first time, then you should consider the following points:
- Use the R.C.C location rule when buying an investment property. It should be located either near the River, Coast or City Centre. Properties in these areas generally have demonstrated higher rates of capital growth and rental returns.
- If you are buying off the plan, check the track record of the developer as to whether they can deliver the product they are promising.
- One bedroom apartments with attractive views have a higher resale value.
- Consider buying a property where there is a broad range of property owners rather than just investors. For example, if the area has a significant number of owner occupied homes it means that the potential pool of people wanting to buy your investment property in the future will be much higher than a property that just appeals to investors.
- Rental income is a key factor when choosing an investment property. Your property should be located close to schools, shops and transport to attract the highest number of tenants.
- Always work towards a strategy of buying several investment properties rather than just one or two. Through owning several investment properties, you can create significant amounts of personal wealth. To achieve this outcome, put in place a long term strategy and stick to it.
- If you plan to buy investment properties, make sure you obtain professional financial and taxation advice. Getting the correct finance in place can be just as important as selecting the investment property.