I would be very careful with what fees etc are involved.
Someone came to me the other day with a nice 1 bdr unit they found in cairns for around $50K and a ROI of 10% and couldn't believe how cheap/good of a deal it was.
When we had a look at it properly and took the strata fees, management fees and insurance into account, even if they paid cash for the unit they still would've been slightly out of pocket every week.
Not saying yours is like that but when the purchase price and rent are such small amounts, it may give a great ROI before expenses, but it doesn't take long for them to eat away your profit.
Cheers,
Perhaps it's a funny thing about yields but a 10% gross yield on a lower priced property might not be as impressive as lower gross yields on higher priced property as the fixed costs (rates, strata etc) take up a much larger percentage of the gross income.
Otherwise there is some excellent commentary about the potential capital growth issues. One bedders by themselves can be excellent and there's some powerful demography pointing that they could be strong performers in our future, the issue is really the scarcity factor (or lack of in large complexes where they are all the same product), supply and demand again, rather than any issue of 1 v 2 or more beds.
I think you need to weigh all risks well. I do not invest in 1 bedroom units, as it is proven not to bring enough cash flow. As well I would not invest in a unit for retirees.
Have to disagree i love 1 bedroom units however find that often you cannot buy them cheap enough.
I own a block of 18 units in Brisbane with 4 of them 1 bedroom and the rate of return is far better than the 14 x 2 bedroom units.
In saying that i prefer to own and control the whole block rather than a single unit within the complex.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I have no problem with one bedroom units however I have mainly brought two bedroom units because even people who are divorced often need another room for children. However given the cost of rents single people do not want to pay extra for two bedrooms.
If you are going to buy a one bedroom make sure it is at least 50 square meters in size and again location is important. If it is close to public transport and shops it will be easier to rent.
I am involved in a development at present that has a mix of one and two bedroom units. The smallest is 50 square meters and the largest one bedroom is 58 square meters plus balcony.
It is across the street from a Coles supermarket and coffee shops. It has a park at the end of the street with freeway access just five minutes away.
I make the above comment because when developing property I have the same view as when I buy investments. I would never build something that I would not buy for myself
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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