Units offer an ideal pathway into property investment for beginners. Here’s your guide to getting the most out of investing in units.
So you’re thinking of buying an investment property. Australia offers plenty of opportunities. From houses to units, you’re practically spoilt for choice in the current market. Many beginners choose units as their first options.
However, this also raises a few issues. Houses and units each have their own pros and cons. In the case of units, you’ll benefit from lower prices, plus high demand if you choose the right location. You also split maintenance costs because they’re a joint concern with other unit owners.
Having said that, keep in mind that the larger the apartment complex, the higher the maintenance costs. Lifts and other shared features need repairing, which is money out of your pocket. You also have to deal with the limited size of the typical unit.
Nevertheless, you can generate high yields with the right advice. These are our investment property tips for beginners who want to buy a unit.
Tip #1 – Choose the Location Wisely
You may find a unit that looks like the perfect investment property. Australia contains plenty of attractive units with great features. You’ll find them everywhere from a city’s Central Business District (CBD) to its suburbs. However, the unit’s features are not as important as its location.
Remember that the highest demand for units comes from young professionals. These tenants typically want easy access to the city. As a result, units in rural and outer suburb locations may not be as viable as you think. Your tenants may not care about the unit’s features if they can’t get to work in good time from the unit.
As a general rule, buy units that are as close to the city as possible. Place particular focus on the CBD. Reconsider your choice if there aren’t any public transport links or roads linking the unit directly to the CBD.
Tip #2 – Look for Lots of Owner-Occupiers
Want to know a great trick for keeping maintenance costs down? Look for units in blocks that have a high proportion of owner-occupiers. If the block has 60 to 70% of its units owned by owner-occupiers, you’ll spend less on maintenance.
Why is this one of the best investment property tips? Beginners will find that owner occupiers have a vested interest in keeping the block well maintained. As a result, investors benefit from better presentation, which raises demand. Of course, you also benefit from lower maintenance costs as shared assets rarely fall into disrepair.
Tip #3 – Consider the View
You may not realise it, but the view can play a big role in a potential tenant’s decision. A unit looks less attractive if the windows look out to a ground level view of the street. However, units at the top of a block aren’t always better. If the unit is too high up, the tenant has to deal with high winds.
You’re looking for the sweet spot where there’s a nice view of the surrounding area, without any practical issues.
Tip #4 – Check the Orientation
The unit’s layout also plays a part in your tenant’s decision. For example, a unit with no natural light looks drab and unappealing. This creates a bad first impression, which lowers your chances of attracting tenants.
Generally, north-facing units fare better than others. These usually benefit from more natural light and ventilation. It’s a bonus if the unit faces away from any busy roads, or other sources of noise and regular pollution.
Tip #5 – Look for Parking
One of the biggest issues with inner-city units is the lack of parking. Most of your potential tenants drive, so they’ll want somewhere safe and easily accessible to keep their cars. If you can’t provide that, you lower the demand for your unit.
Asking about parking is one of the best investment property tips. Beginners will find that they attract more interest if they can offer a space with the unit, as this makes their tenants’ lives easier. If you can’t find a unit with a space included, look for alternatives. Examine the local area to find out where other people park their cars. With a bit of luck, you’ll find a car park a short distance away from the unit.
The Final Word
Units present some risk due to shared maintenance costs and a limited audience. However, the benefits mentioned earlier make them a great property investment for beginners. Combine the above tips to secure a good unit.
Once you’ve purchased your unit, contact Washington Brown. We provide high-quality Quantity Surveyors who produce detailed depreciation schedules. You can save thousands of dollars on your tax bill with our help.
Learn about unit depreciation schedules by clicking the link.