Adrian,  Studio apartments in my neck of the woods generally come under the holiday let which  – for me anyway – is a good enough reason to give a wide berth, however the headache you will have to go through to even try and  get the money for a studio is a another very good reason to keep away. The resale factor down the road when (if you ever do) you want to sell is the third reason, as the prospective buyer will have to go through it all themselves. If you do manage to find a lender and you can get it leased as long term (6 to 12 month leases) then the yields can be rewarding, however bear in mind the capital growth will almost certainly be minimal. I am on the Gold Coast and while now i do not advise any of my clients to buy studios I have been involved with them over the years and i can tell you the tenant (on the gold coast anyway) is likely to be  transient in nature, single and probably spends more time at work and out socialising more than living in it and not being in position of owning very many worldly goods- studios are almost always furnished. This can sometimes lead to tenants not keeping up with rents and being in a position to disappear into the cold dark night without too much trouble.

One bedrooms are again not what i would advise for everyone, but they are certainly a big improvement on studios, the size factor is a big plus, it will be over the 50sqm and could even have secure parking. Generally speaking a one bedroom can be rented to all walks of life including young professional couples, the elderly (ground floor is good), singles and separated couples looking to find their feet again. A good sized well proportioned one bedder can be a real jewel in a portfolio and i know of  at least one investor who buys nothing but one bedrooms, and as his plan is never to sell than it works for him.

just bear in mind those big yields you see are generally gross figures so take a bit of time and get all the costs before signing anything. Body corps are horrendous in buildings that have holiday let leases and even if you can do a long term lease you still are liable for the same body corp fees regardless. Also long term lease management fees will should be around 7.5% plus GST as opposed to 13% plus GST plus cleaning fees and more for the holiday let..

I had some studio apartments located in Cairns offered to me to market for somebody not so long ago ( which i politely declined). They had unreal expectations of what they were worth and after looking up the sales in the complex, in which 16 had been sold in the last six months- again, not a good sign, the average capital gain had been after four years,  less than four percent. I am afraid I do not see that as good investing.

The main thing is Adrian, which ever way you go do the homework first and try not give in to the urge to buy something purely because it is affordable,

Terry is absolutlely right, I tend to direct my clients away from them. Particulalrly in my neck of the woods, very hard to sell and if you are looking at a big block, my experience has shown me there are generally a lot on the market at the same time. But if you are going to get the 50sqm or under you would be well advised to get a one bedroom, not a studio.

dbt,

while your right, the first home owner grant has kept that market bouyant, I would not say it has really forced prices up too much. There are still plenty of Developers and vendors looking to sell. Doom and Gloom isn't always a bad time to buy either. Make offers, they can only say no – and heres a tip, even if the salepeople tell you the vendors won't budge, chances are they will. Infrastructure and local gov. activity is a great way to gauge a place but is not the be all and end all either, a bargain is a bargain is a bargain and that can be anywhere. I am not saying cheap is good, but a bargain is good. if that makes sense. Homework is the key.

I read a post a few minutes ago and some one mentioned it is a looonnnggg time coming for price increases, while i am sure he was a little bit tongue in cheek and commenting in general on the current "crisis", it was not entirely accurate, depending (of course) on where you are, prices in some areas have not dropped much , if any at all. and some places have seen prices still going up – snails pace granted but still heading north. Certainly Brisbane is a strong market to come. Good Luck and remember do your homework.