Buy 1 bed & Renovate or Unrenovated 2 bed

Hi guys, I am curious what you guys would do!

If you were starting out and financially could afford to buy either a 1 bedroom unit and renovate it or buy a 2 bedroom unit without renovating (because of the lack of extra cash to renovate it) What would you choose?


Options

a. 1 bedroom unit - (I would cosmetically renovate)
Total cost to purchase and renovate $230 K- $240 K

b. 2 bedroom unit
Total cost to purchase $240 - $260
Wouldnt be able to renovate a 2 bed though due to lack of cash.


What would you choose to buy if you were a beginner? Option A or B

My sister and brother in law think I'd be better off buying the 2 bed. I think Option A could be the way to go, but not sure.

I will see the mortgage broker on Monday and hopefully in a couple of weeks will know for sure how much I can borrow. I think I will be approved for a $240K property or $250 K. But not sure.
 
What would you choose to buy if you were a beginner? Option A or B

I'll go for Option A; I think more people look for more bedrooms. And you can renovate it next time when you have the cash but if it's a 1 bedroom unit you can't add another bedroom right? ;)
 
Hi Kim,

Definitely the 2-bedder - it appeals to singles, couples, friends, small/young families - so many more options - both for renting now and selling in the future.

Cheers,
Jen
 
I've had both a 2 bedder and a 1 bedder. All the 2 bedder ever attracted were two housemates, who would live in it for a year, then leave. the 1 bedder got a single woman for a nubmer of years (who left to get married), then a couple of students (one who stayed fro 6 months, one who stayed for a couple of years).

Based on my expereince, I'd be going the 1 bedder - it gets longer term tennants and the change over is where the fees, vacancies and repairs hurt.

Long term growth - this is a different thing, it'd depend on what the suburbs are and what their growth is, something you can look up on the internet.

Jas
 
1 bedder if you can convert it to 2 beds at less than purchase price of comparable 2 bedders. otherwise option B - 2 beds.
 
I would generally go for a 2 bedder, but with more single people the demand for 1 bedder may be increasing.

Article on apartments in the Herald Sun today has 1 bedders growing by 7.7% 2 bedders growing by 5.6% in the 12 months to 30/6/09(REIV figures).

Cheers

Pete
 
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....a. 1 bedroom unit - (I would cosmetically renovate)
Total cost to purchase and renovate $230 K- $240 K

b. 2 bedroom unit
Total cost to purchase $240 - $260
Wouldnt be able to renovate a 2 bed though due to lack of cash.

I doubt you would see this minimal differential in outlay (purchase price + reno)between a 1 & 2 bedroom in a similar property type and suburb. The best answers will depend significantly on the suburb(s) of choice.

Yields should be higher in a one bedroom apartment, the costs are less and so is the risk. If you are starting out, then usually a set and forget investment might be the better option. Everything in stages.

I would look at one bedroom flat, rentable today with an opportunity to add value down the track.
 
Yields should be higher in a one bedroom apartment, the costs are less and so is the risk. If you are starting out, then usually a set and forget investment might be the better option. Everything in stages.

I would look at one bedroom flat, rentable today with an opportunity to add value down the track.


I can see the advantages and disadvantages of both.

The advantage I see in a 1 bed is that I would be able to buy again sooner rather than later. Especially if were to renovate it, add some value and the yields would be good too. Less drain on cashflow. I would be able to save more to help with the next purchase.

I have 1 PPOR atm and my goal is to buy 2 ips by 2013. I might not be able to do that if I start off with something more expensive (like a 2 bed). I would have to wait till the negative cashflow was a bit more manageable and I would need to have enough equity to purchase again.

I really want to take advantage of the upcoming Gorgon project and I would like to be nicely positioned with 1 ppor and 2 ips by 2013 so that when values start to go up which I think they will in 3-5 years time I will have 3 properties under my belt rather than just the 2!! This will be a great lunching pad and I will be set up to buy more ips.

I will be seeing Lex my mortgage broker on Monday and will discuss with him.

Lots of people have done well starting off with a 1 bed. It could be a way to get going quicker! - to leapfrog.


The advantages for the 2 bed are many as mentioned by lots of posters before. I agree with and understand.

I will need to way up which is better for me I guess based on what repayments I can afford and the strategy I want to follow. I will look at all the pros and cons and decide.
 
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