1 or 2 bedroom units.

I know its obvious to go for 2 when possible, but if a unit is up for sale which is a 1 bedroom within 5km from the city, with a decent return ($220pw, up for 225-230k), do you go for it, or look for something maybe a little further out/more expensive, but with 2 bedrooms.

With 1 bedroom, it closes you off to a section of the market... but can they be worth it?

http://www.realestate.com.au/cgi-bi...mt=&header=&cc=&c=26547819&s=sa&tm=1258524016

There is is.

Thanks, Nick
 
Nick, it is only a 5% return - pretty average. You can get that just about anywhere.

Of more concern is the fact that this unit is less than 50m2 - so you might have some financing issues and if you don't the next purchaser when (if) you want to sell may too.
 
Hi Nick

Agree with Propertunity ..that is only an average return. In today's market, I think it's quite possible to obtain the 7% return on units. Though I agree, these will be further out ..not 5 kms from the city.

I would prefer a 2 bedder or even a larger 1 bedder which you could possibly convert to a 2 bedder.

If you think you will get the capital growth and it's not breaking your bank..then maybe it merits consideration.

Goodluck Nick !
 
The under 50sqms is not only a problem for your own purchase finance, but possible future refinances, and valuations as finance restrictions on small apartments mean there is less people who can afford the deposit required to buy, meaning less demand, meaning perhaps lower capital growth.
It doesnt mean 1 bedders are sometimes mispriced, or aren't good value, or that financing issues may resolve themselves in the future.....
 
Ther is no doubt, that 1 bedroom units have been less attractive in the past. From my understanding, more financiers now accept undre 50 sq m units than was the case in the past. I noticed there was a plan, is it over or under 50 sq m. That being said, if you read what the future demographic of property owners/occupiers will be, and you read a lot more singles will be in the picture. Does that not mean, that the past will not be reflective of the future?
Some thing to think about.
 
i bought a 1 bedroom unit in newport for 190k here in melbourne early in the year.

since then 4 properties have sold which have been similar.

210k, 218k(unit next door), 225k, and one last week for 230k.

THe bank revalued it for 220k... either I got a bargain or the market has moved up. Currently renting for $210 a week...

It is about 40m2 but they include the car space onto of that which puts me over the 50m2 for lending purposes.

It is 8km from the city.... having said that I think everything that was under 200k at the start of 2009 is pretty much going for 10-15% more now due to lower rates and affordability...

I would be suprised if this end of the market continued to grow at the rates we have seen in 2009...

just my uneducated opiinion.
 
It seems all property gets good growth if it's the type of property that is in demand for the area. 1BR units seem to be in higher demand closer to the city, so if this fits the demographic, it will appreciate in value. Will it appreciate more than a 2BR further out for the same price? Maybe, maybe not. Only hindsight knows the answer.
 
When I bought my 1 bedder 4 or 5 years ago you could get a two bedder for about 40k more. That gap has more than doubled now, ie. the two bedders are going for about at least 80k more, double the capital growth. Also, I've just tried to refinance. Westpac valued the place at 270k, but would only do a 70% lend because of the size. Commonwealth Bank would do 90% + LMI capitilisation, but the valuation came back at only 240k! So as you can see, the size can restrict your options down the track. If I had my time again I would definitely have gone for the two bedder.

Only thing I wonder if there will eventually be a "catch up" for the one bedders, where people who are priced out of the two bedders are eventually forced to settle for a one bedder? But it hasn't happened yet.....
 
i bought a 1 bedroom unit in newport for 190k here in melbourne early in the year.

since then 4 properties have sold which have been similar.

210k, 218k(unit next door), 225k, and one last week for 230k.

THe bank revalued it for 220k... either I got a bargain or the market has moved up. Currently renting for $210 a week...

It is about 40m2 but they include the car space onto of that which puts me over the 50m2 for lending purposes.

It is 8km from the city.... having said that I think everything that was under 200k at the start of 2009 is pretty much going for 10-15% more now due to lower rates and affordability...

I would be suprised if this end of the market continued to grow at the rates we have seen in 2009...

just my uneducated opiinion.

Thats not a bad return, purchasing for 190K, and receiving $210pw.

Here, the 1 bedders i have looked into are still around $215-240K (within say 8km of CBD), but returns are around the $180 mark.

Not sure if its Adelaide, but yields are low for what i would expect for some units. For example, a 2 bedroom unit 25-30km from CBD, little run down, going for $145K is fetching $160-170pw, whereas a 2 bedder in more of a bluechip suburb, valued around $240K is getting $180-190.

It just doesnt add up. And its not like there is a shortage further out... units are popping up left, right, and centre!
 
Nothing wrong with units. Just that 5% is probably not that special. Good on a house though. For unit would hope to get higher returns due to body corporate and potential issues if sinking fund is insufficient.
 
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