In real estate – as in life – we’ve all got to start somewhere. And that somewhere (more often than not) is with a modest investment: the one bedroom apartment. Much maligned for all the wrong reasons, in today’s Think Property & Co blog we show you why buying a one bedroom apartment is the very best decision you can make.
Too often, property investors’ enthusiasm for one bedroom apartments is quashed by well-meaning (but uninformed) parties. Think co-workers, friends and Uncle Martin (who is quick to opine on most topics at Christmas). A buyer may have saved their dollars and be on the precipice of purchasing their much longed-for property in a suburb they love, only to be confused by the negative opinions of others about their impending purchase.
Here’s what your one-bedroom-apartment naysayers will typically remark:
- “What do you mean, it costs $430,000? You can buy a four bedroom palace in Hillside for that!” An objection often exclaimed by an incredulous relative who has enjoyed living on a quarter acre block for an extended period of time, comparing property in the inner-city to property in the outer-suburbs simply doesn’t make any sense. Property in inner-city catchment areas have a higher per square metre value than those in outer urban locations. The reason for this is proximity to amenities and lifestyle. When you purchase a one-bedroom apartment in an urban area you’d love to live in, you’ll be close to public transport, amazing culture, employment opportunities, education, healthcare and awesome food trucks. (Don’t discount the value of amazing dining, people!) The capital growth of your smallish one-bedroom apartment will exceed the value of a larger property in an outer-suburban area, because there is simply greater demand for property in urban centres. With the huge rate of migration to Melbourne, housing close to amenities is in short supply – whereas quarter acre blocks in areas devoid of transport, employment or access to the CBD are dime-a-dozen. Compare growth on a one bedroom apartment in Collingwood versus a four bedroom home in the outer suburbs over a 10-year period – you’ll see the one bedroom investment makes incredibly good sense! Take that, Uncle Martin.
- “Body corporate fees are for suckers.” How mean. And how untrue! If you’re not aware, a body corporate is an organisation which takes care of the ongoing maintenance and insurance of an apartment building. From boutique buildings of six apartments to goliath property developments of 400, a body corporate makes sure that a development’s communal areas, gardens, lifts, pools and facades are in good repair. They ensure that the value of your property is maintained, which is very important. Body corporate fees can go from the relatively inexpensive to the quite costly depending on the amount of amenities in your building. If you love the amenities your one-bedroom body corporate offer you – and you can afford the fees – feel confident to go ahead and buy your starter property. If you’re an investor, make sure to do your sums – as high body corporate fees can impact upon your bottom line (but not necessarily your capital growth).
One bedroom apartments make a sensible first property or investment purchase for several key reasons; they’re comparably more affordable than larger residences, they allow you to buy into areas of high demand with strong capital growth, and they’re an easy investment to get out of. There’s always someone who wants to get their hands on a one bedroom apartment, as they’re the first step on the rung of property ownership. Want to make the jump from tenant to property owner, or from property home owner to investor? Let’s talk.