To ground floor or not to ground floor?

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From: Delia L


hi there,

I have been researching low rise apartments (2-3 levels only) in Sydney inner west suburbs. Very close to local shopping.

There is an interesting question I have been pondering and get confused. I am hoping to get other people's input on it, thanks in advance. :)

Well, for a low rise development, would the ground floor units be better investments than upper levels, assuming the same internal areas and layouts?

My thoughts are ground floor units usually come with mostly paved terraces (except plants at the border) in front/and or at the back providing extra living and entertaining areas which is theoretically (??) good for apartment living. But the tenants will need to water plants around the border.

However, whenever I walk pass apartments/townhouses with front terraces (even enclosed terraces), no one really hang out there. Moreover, upper level balcony would have over hang on top and block some sunlight into the ground floor unit. What about security and privacy living in upper levels although smaller balcony/external areas?

Assuming very similar asking prices of ground floor and 2nd floor, which would be a better investment in terms of rental and capital gain?

extra info-
ground floor terraces- 35-40m2
2nd level balcony- 12-15m2
asking price- very similar if not the same

thanks again. :)

Cheers

Delia
 
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Reply: 1
From: Bruce Graham


Delia,
Having three units as rentals,
I would not consider anything on the ground floor.
As you wrote yourself, privacy and security
are the main reasons.
Renters like the feel of units above ground level.
Having my time over, I would not buy units again.
Houses are the "go".
On large enough land size for dual oc.
Just a comment to really confuse you.
Bruce G.(Sydney)
 
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Reply: 2
From: Paul Zagoridis


I normally invest in Sydney inner-east but it's too hot for me at the moment.

Rules of thumb are dangerous because they only work until they stop working without warning.

I've found rent returns are a good indicator of demand in any area. Call a number of agents in the area and ask them what they have available today.

Ground floor units have more space but greater security risk, plus tenants don't like traffic at their windows.

Top floor has more light but three flights of stairs. Elderly tenants don't like that.

I've found first and second floor units are easier to rent.

Paul Zag
Dreamspinner
 
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Reply: 2.1
From: Delia L


Thanks Paul and Bruce. :)

When upper levels are better and easier renters, does it extend to cap gains?

Yes Bruce, you are spot on. I'd love to buy houses in inner west yet my budget just couldn't stretch that far... it's the case of either good size unit in small block or save for another year and a half before purchase while running the risk of prices moves in the saving period. Any thoughts anyone?

cheers

Delia
 
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Reply: 2.1.1
From: Rolf Latham


Hi Delia

Find a lender that will lend more and capitalises LMI. Then you can get your real thing place earlier

Ta

Rolf
 
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