Investing in studio/1BR apartments? Also investing in retirement community cent?

It can be difficult to get finance on studio apartments if they are less than 50m2 – the LVR would need to be lower so you would need to put it more cash upfront.

The rental yields of 10% may seem attractive on paper but usually the body corp eats into it too much to make it a viable investment. Have you called around to any of these places to see what the body corp fees are?

Are you limited in who you can rent to? Ie student accom or holiday let?

Capital growth would be very limited (esp for the retirement unit) as you have a very limited pool of buyers but also you can face the supply vs demand issues in buildings which will keep a cap on CG but also rent.

You may be faced with long vacancy too (why should someone rent your property as opposed to the other 12 units for rent in the building?). If you’re mainly renting to students (who are the ones typically drawn to studios) then you will more than likely have a couple of months vacancy over the christmas period.

In answer to question 2 – there’s better deals out there. Is it mainly the yields drawing you to these types of places? You can get a house with a decent amount of land for the same price and yields in some areas which offer better investment prospects ie cosmetic reno to manufacture CG or subdivision potential.

Anyway, these are just some of the things I thought of – hope it helps.

Hi

I am by no means experienced but I can at least pass on what I have learnt from buying my first property investment in a 1 bedroom apartment. I had trouble securing finance and had to come up with the difference the bank wouldn’t loan. It is in a prime location BUT I have had huge trouble getting it tenanted this is because I’m competing against all the other apartments in the block. You need to have something different and desirable in your apartment or else you will be competing with other owners this has pushed the rent right down.
If I knew what I did not then I think I would have invested a lot differently. I’m thinking of creative solutions to change the situation or possibly sell. Good luck :)

Great advice above- just to add.
Be careful that these studios are not serviced apartments. They look very attractive but ongoing costs are very high.

When looking at buying in inner Sydney in 2008 we looked at many studios and apartments. Yes those serviced ones sure did look great and sounded SO cheap. But I’m glad we steered clear of them. We bought a TINY 1 bewdroom instead for the same money. It has gone up in value by 60% since then. The others have gone up considerably less in that time.
Also there are often so many of them that demand is never higher than supply, thus keeping prices down.

As with anything- if it looks great and you find yourself saying 2. Why are people not snapping these low cost (150-160k) deals up?

Then there is more to the picture. Good on you for doing your homework.

Keep looking. The right property is out there for you.

• This reply was modified 10 years, 3 months ago by  Catalyst.