1 bedroom unit

[Rizwan]

Is it a good idea to purchase a 1 bedroom unit i know that capital growth for smaller apartments isnt good. I was looking at purchasing a 1 bedroom apartment in gladesville sydney. Internal size is 47sqm + car space of 13sqm gives a total size of 60sqm. I like the apartment location and price however was not sure if this is too small and hence would not fetch good capital growth in the future.

What do you guys think?

 

[Rixter]

The banks percieve units of this size to be higher risk. That is why its harder to get finance from them for properties such as these. Banks will require you to put more of your own money in on these type properties to lower their risks.

Personally I would steer clear of of them because they do not fit my purchasing criteria and overall big picture investment strategy.

But we are all different, have different wants or needs, and time frames for wanting them. Whats right for me may not be right for you, and vice versa.

Overall what are you ultimately wanting to achieve?

What time frame do you want it all in?

The answer to these questions will dictate what strategy, what type of property and where to buy.

Hope this helps.

 

[Rizwan]

basically this will me first IP and with interest rates going high i dont want to extend myself so im going in as a low risk investor for time being considering its my first IP and the fact that interest rates are going high.

Im getting the unit for abount 240k the strategy atm is to just get my foot in the door for time being purchase something cheap that will rent out and then purchase another property next year. If i over extend myself now i wont have the luxury of purchasing something for another 2 - 3 years which may not be beneficial considering the market is going down and there may be opportunities to buy a few bargains in the future.

 

[Peter_Tersteeg]

If you feel the market is currently going down, you probably shouldn't be buying anyway as you'd be loosing money.

Personally I don't beleive the market is dropping, provided you buy well.

Small units can be hard to get finance for, but it can be done. I have a few client who buy 1 bedders and get a great rental return for them - inner Melbourne property positively geared at settlement.

The capital growth also tends to be reasonable. They're buying for a low cost base, so people can easily afford to purchase in this price range.

Buying these types of units comes down to the same fundamentals as buying any other property - buy well, you make your profit when you buy, not when you sell.

 

[The Y-man]

The capital growth also tends to be reasonable. They're buying for a low cost base, so people can easily afford to purchase in this price range.
.

I'll test these theories out shortly - I am putting a house, a 1Br apartment, a 2BR aparmtent and 3 BR villa unit on the market at the same time (in "similar" locales)....

Cheers,

The Y-man

 

[Novar]

I shy away from 1 bedders. The rental opportunities are too limited. It's either a couple only or 1 person who may rent.

I agree if you think there is going to be a drop in prices....WAIT
OR ...just keep a close on eye on the market in the area you want.

Get 2 bed at least, if you can. ..people can then share rent

 

[THEHEATH]

I bought a 1 bedder for much the same reasons as you. Have seen the 2 bedders around here go forward a lot more quickly than my 1 bedder (still done ok though). If you can extend yourself that little bit extra then I think it is worth it, if not then a one bedder is better than a no-bedder

 

[Rolf Latham]

Hiya

I think the Gladesville area and one bedder is ok.

If it was a suburb that didnt have ok transport, and close proximity to water, and the CBD, then maybe it would be different.

I used to live in Putney, so know the area sort of well.

As pointed out by Rix, there may be finance issues, though if the place has an internal laundry then it would be ok with many lenders to 97 % lvr.

Funny enough there is a housing commish bock in the area called
Blandville Court ...........but its next to an estate that has million dollar homes in it !

ta
rolf

 

[Ahmad Azimi]

I actually live in Gladesville. I dont think you would go wrong with your investments in this area. As everyone here said with smaller units you wont get a higher loan. I think if it is less than 50m2 then you're looking at less than 70% LVR.

 

[mystery]

Rizwan,

Although our recent purchase is not in Sydney the buying/research process is the same ....

We've just bought a 1 bed flat/unit in Queanbeyan about 9km from Canberra CBD for under $120k, .... we have a tenant paying $140pw and with a basic reno (paint, carpet, bathroom tiles and freshen up kitchen - max of $10k budget) we should be able to get the rent up to the $180 mark.

It probably won't grow at the same rate as a 2 bedroom, but at the price we paid and it's close proximity to employment, the CBD, transport combined with the chronic rental shortage in the region I believe we will do okay. I can only see upside on this one.

I suppose I'm saying that although I'm not a big fan of unit's (I hate b/corp costs), if the deal stacks up with the purchase cost, location and yield and it's what you can comfortably afford them why not? It really comes down to personal preference and your expectation's of what you want from the investment.

Oh yeah ... get to know the market area well, get a genuine feel for the market value and see if you can grab one that you believe is undervalued, ... this will only happen by spending many hours studying the intended area and negotiating hard.

Speak to property managers (not sales agents) in the area, ask them what rents well, what features tenants are looking for .. e.g. secure car parking, security, transport etc And then base your search around that information ..... buy what is in demand and you will have no problems attracting tenants and commanding top rent.

Good luck with your intended purchase ...

Martin

 

[troyhunt]

Issues of your own personal strategy and market cycles aside, I believe changing demographics (people staying single for longer) combined with affordability issues at present mean 1 bedders *should* be a stronger prospect than in the past. Vacancy rates at present should mean well positioned properties asking market rent should have no trouble staying occupied. My only other suggestion is to keep it above 50m (exc. carpark) for finance purposes.

I've seen very positive results applying this strategy in recent years.

 

[Alex P Keaton]

I may buy a 1 bed unit or apartment within at least 4 km of Perth cbd as my first ip, then move on to 2 beds (as they are easier to re-sell if I needed to)

This first purchase will help me get into the market without breaking the bank. I will be able to have a buffer behind me as I wont have to put my entire savings forward as my deposit. I want to have $20 K in my offset.

I believe there is high demand for 1 bedders in Vic Park, Highgate, Perth, East Perth, Leederville.

I dont think I can go wrong buying in these areas. Also I have heard its better to buy a low rise (3 stories) rather than high-rise apartments.

Any other investors start off with 1 bed apartments, and how is your first ip going? Has the CG been reasonable in your inner city apartment. I think in the suburbs I listed I should be able to get at least 10% pa growth.

 

[Alex P Keaton]

Im getting the unit for abount 240k the strategy atm is to just get my foot in the door for time being purchase something cheap that will rent out and then purchase another property next year.

Did you buy?

 

[Alex P Keaton]

Issues of your own personal strategy and market cycles aside, I believe changing demographics (people staying single for longer) combined with affordability issues at present mean 1 bedders *should* be a stronger prospect than in the past. Vacancy rates at present should mean well positioned properties asking market rent should have no trouble staying occupied.

I agree


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[Rixter]

I believe there is high demand for 1 bedders in Vic Park, Highgate, Perth, East Perth, Leederville.

Kim, how & where have you verified to come to this conclusion?