Capital Growth of apartments in these suburbs

[Tsea]

Hi all, just deciding whether to invest in a 1 or 2 bedroom apartment in a suburb such as; Prahran, Windsor, St Kilda East, St Kilda or Elwood.
I am only looking at the older blocks which are smaller in size and nothing OTP.
Is there likely to be considerably more capital growth in a 2 bedroom apartment in this area compared to a 1 bedder?
The rental yield appears better for 1 bedders at this stage hence my thinking to go for a 1 bedder, however I am happy to deal with the worse yield if over a longer period of time a 2 bedder would strongly outperform a 1 bedder in growth
Thoughts?

 

[Tsea]

come on lol surely at least 1 reply?

 

[Propertunity]

There are no stats that separate 1 brm units from 2 brm units. They all get lumped in together.

 

[peastman]

It's a good idea to buy the sort of property that is in demand by tenants and owners of the area.
The areas you are looking at are popular for both one and two bedroom units, so probably both will do well.
Over the years, I have done rather well out good rental return one bedroom inner suburban apartments.

 

[Jake Milne]

In the areas you've nominated both 1BR's and 2BR's are okay. In many suburbs 1BR's are just not viable as there aren't enough single professionals to give you a decent rent rate with a low risk vacancy rate.

As aforementioned there's no clear way to statistically review the difference between 1 or 2 bedrooms but each have their own set of pro's and cons.

1BRS:

Pro -
a. Usually lease faster than two bedrooms;
b. Have better yield;
c. Lower overheads
d. Smaller land tax footprint.

Cons -
a. Smaller buyer pool when you sell;
b. Attracts younger (sometimes less reliable) tenants;
c. Can often be smaller than 50sqm which causes problems with finance;
d. Very rare to change floor plan for profit.

2BRS:
Pros -
a. Larger buyer pool when you sell.
b. More choice of tenant types;
c. Sometimes there is potential to improve floor plan for profit.

Cons -
a. Lower yield;
b. Usually takes longer to lease than a 1BR;
c. Higher land tax footprint;
d. Higher outgoings.

In my opinion there are much more important factors when buying apartments in the inner south eastern suburbs than 1,2, or 3 bedrooms. Have a search through my previous comments and I'm sure you'll have plenty of info of what to and what no to purchase.

 

[Tsea]

In the areas you've nominated both 1BR's and 2BR's are okay. In many suburbs 1BR's are just not viable as there aren't enough single professionals to give you a decent rent rate with a low risk vacancy rate.

As aforementioned there's no clear way to statistically review the difference between 1 or 2 bedrooms but each have their own set of pro's and cons.

1BRS:

Pro -
a. Usually lease faster than two bedrooms;
b. Have better yield;
c. Lower overheads
d. Smaller land tax footprint.

Cons -
a. Smaller buyer pool when you sell;
b. Attracts younger (sometimes less reliable) tenants;
c. Can often be smaller than 50sqm which causes problems with finance;
d. Very rare to change floor plan for profit.

2BRS:
Pros -
a. Larger buyer pool when you sell.
b. More choice of tenant types;
c. Sometimes there is potential to improve floor plan for profit.

Cons -
a. Lower yield;
b. Usually takes longer to lease than a 1BR;
c. Higher land tax footprint;
d. Higher outgoings.

In my opinion there are much more important factors when buying apartments in the inner south eastern suburbs than 1,2, or 3 bedrooms. Have a search through my previous comments and I'm sure you'll have plenty of info of what to and what no to purchase.

Thanks Jake for the really detailed reply. Very useful information and greatly appreciated

 

[Jake Milne]

Not a problem Good luck with the search.