There are multiple factors to take into consideration when buying a unit as an investment. Our checklist helps you keep track of them.
Unit buying checklist
If you're buying an apartment unit as an investment, there are more considerations to account for than just a decent price and a desirable location. A number of other important factors will end up determining whether or not your unit is a wise investment. The checklist below will help you on your property hunt.
Look at each of the items and assess potential properties based on the checklist. While there are numerous details to take into account when deciding on a unit, the list below will help you build a strong shortlist of contenders.
1. Uniqueness
You'll want the unit you purchase to stand apart from others in the area. Uniqueness may not be the main factor for finding tenants in a high-demand area, but it can become a drawcard when you decide to sell.
Finding distinctive characteristics can be difficult if your unit is one in a block of hundreds. However, adding bespoke features or design elements can help yours rise above its neighbours. You could also consider purchasing a unit in a smaller block.
2. Parking
Parking is a huge factor to consider when choosing a unit. This is particularly the case if the unit you're considering is some distance from public transport links.
Off-street parking is obviously a big draw for units, but readily available on-street parking can help make up for the lack of dedicated parking. If the building you're looking at does have off-street parking, you'll also want to consider whether there's available and adequate visitor parking.
3. Strata
Strata fees will have a huge impact on the cash flow from your investment property. Strata fees go toward maintenance and upkeep of the building. If they're too high, you could find the income you receive from rent diminishing quickly.
In addition to the fees, you'll want to pay attention to the strata rules. Strata rules will govern the alterations and additions you can make to your unit, as well as putting some restrictions on its use. Some strata rules can severely limit the flexibility you have as an owner, so make sure the rules for the building you're considering aren't too severe.
4. Security
Security is an essential feature when living in close proximity to numbers of other people. Smaller blocks where people are likely to know their neighbours can get by without quite as many security features, but safety becomes more important in larger buildings. Look for security systems that make the building convenient for residents to access, but stop strangers from walking in.
5. Construction
The way a unit is constructed can make a big difference to your tenants' experience and satisfaction. Look for units with quality construction and decent fixtures, fittings and appliances.
You'll also want to choose a solidly-constructed building. Apartment living can come with its own privacy issues, but a well-constructed building that reduces noise from neighbours will be attractive to potential tenants.
6. Rental trends
When deciding where to buy, you'll want to look at the rental trends for suburbs, beginning with determining the median rent for the areas you're considering. Then you'll want to look at recent rentals for similar apartments to determine asking rents. You'll also need to research vacancy rates to gauge demand and get an idea for how easy or difficult it might be to find tenants.
7. Potential to add value
It's likely that you'll eventually sell your apartment with an eye toward making a capital gain. If this is the case, you'll want to look at units that have the potential to add value. Whether it's minor cosmetic improvements or major structural changes, find a unit that offers you the opportunity to boost your return on investment.
Check out all our home renovation guides here
8. Amenities
When you're considering the amenities to look for in an apartment purchase, make sure you stick to the amenities that actually provide a return. Features like swimming pools, gyms, tennis courts and the like will add to your strata fees while doing little to attract potential tenants or eventual buyers. Generally, tenants are more attracted to amenities like well-manicured outdoor areas, security features and lift access.
9. Size
The size of the unit you purchase will largely determine your target market for tenants. You can end up limiting your market by going either too small or too large. Two-bedroom units tend to have the broadest appeal because they open your market up to both families and flat shares as well as single professionals.
10. Location
Location will be one the primary factors determining your investment’s success. Not only will you want to look for in-demand suburbs, you'll want to look at the location of units within those areas. Potential tenants will be attracted to your apartment if it’s located in proximity to public transport links, green space, schools, shopping and cafes and restaurants.
You'll also want to pay attention to the unit's location in the building. Will it be likely to get sun? Does it face a main road? What level is it on? Typically, higher floors and north- or east-facing aspects away from main roads are most attractive to potential tenants.
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