Hi All,
I’ve been looking through real estate websites for units and townhouses in or within close proximity to major cities. I’ve noticed that in the advertisements for some of the inner city apartments in those huge apartment towers, they claim to have huge rental returns, in excess of 7%. This all makes sense; you would expect to pay more rent for a city apartment.
However my questions are as follows, if these units are offering such high returns why are there so many on the market? And secondly, is it because they have a tendency to suffer from high vacancy rates, when compared to inner suburb townhouses?
Quite often you can find a city apartment for the same price as a townhouse that is situated within 2-3 km from the city.
Does anyone have a preference between the two property types when it comes to a secure income stream?
[king]Dont forget, REA usually list the GROSS rental return. That is prior to all costs (strata, management, rates etc). 7% can often come back alot lower wher you factor all these in.
Thanks for the feedback Tammy.
: )I was referring to the Gross income from both property types. It might be helpful to illustrate my point with an example.
Eg. Both a city apartment and a townhouse in an inner suburb are selling for 330,000 (both 2bdr).
Rental income for the high-rise apartment is $450 per week (7.1% Gross ROI).
Rental income for the inner suburb townhouse is $315 per week (4.9% Gross ROI).Why then, are there so many of these city apartments available if they offer a similar capital gain, similar annual fees (body corporate), but receive much higher returns?
Is there something that I am missing here?
Why wouldn’t everyone be buying these units, (because they clearly aren’t)?
Can anyone offer any explanation?
Or to re-phrase, why shouldn’t I buy a unit in a city tower as opposed to the alternative?
[king]good question buddy. i have wondered this myself.
i have a suspicion that they have a high rate of people renting for 6 -12 months and leaving thus leaving the property empty for sometime.
anyone else have any ideas
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