- Investors and owner occupeirs alike are now seeking apartments
- More than location and amenities to look for, notes Mark Hay
- Also important to future proof
With the recent surge in investors purchasing apartments for investment and many homeowners now following the global trend of apartment living, it could be a good time to view some of the more salient points to property purchasing of apartments as highlighted here by Investment Specialist Mark Hay.
Location – the ever important ingredient of sound property purchase is always location. Both location of the actual project i.e. on a favorable street with an outlook, views or aspect will always ensure good growth with water or city views offering the greater premium whilst the aspect or location of the specific apartment within the complex should also be factored in.
Location in regard to transport, entertainment and services etc. should also be given consideration whether investing in your own house or investment, the location will have the greatest effect on the properties capital growth and rental returns.
Security – regardless of the suburb security is now a strong consideration of any apartment purchase. Both security of the common area e.g., foyer, car parking and the specific apartment itself, is paramount for both rental and re-sale value. If purchasing a ground floor apartment be extra attentive to security issues.
Quality of Finishes – Obviously the quality of finishes effects all properties rental and re-sale figures but more specific for any owner is the upkeep of such finishes i.e. if the whole building’s façade is painted then the upkeep to repaint every 5 years or so can be quite high especially in Multi-Story complexes where access is by scaffolding.
Likewise timber fences, lattice work, heavily landscaped gardens etc. can also require upkeep whilst the internal condition of an apartment can also cause an economic burden – always look out for low maintenance finishes and any telltale signs of building defects and lack of general upkeep.
Points of Difference – Perth buyers and renters are becoming increasingly aware of the need for a point of difference. The design, finishes, colours, amenities, outlook, longterm rental etc. can always be a point of difference that offers the edge to your investment over the rest of the market.
Amenities – The obvious communal facilities such as swimming pools, saunas and gyms offer great attractions but equally important is access to smart wiring, dual phone lines, cable TV etc. which are now becoming everyday requirements for both the rental and resale market.
On the other side of the coin as an investor you need to confirm that the extra facilities and extra rental you can gain from the facilities is proportionate to the extra strata levies needed to supply and service such amenities.
Kitchens/Bathrooms – It’s not just owner-occupiers and it’s not just women – the majority of apartment dwellers will always require kitchens to be stylish and completely functional. Whether you are purchasing at the bottom end of the market or top end, the kitchen still needs to be completely functional and is always a strong selling and renting point of any apartments.
Bathrooms to a lesser degree also need to be functional for today’s living, stylish and roomy and not just an afterthought. Laundries adjacent to the bathroom work well provided enough room is allowed for and the washer/dryer is discreetly screened with bi-fold doors.
Number in complex – This factor is not as important as previously seen. The general acceptance of larger blocks of apartments, which are designed well, hold little downside to a much smaller complex.
The bigger number generally the smaller the quarterly maintenance fees and the better the views as the building rises higher. Larger complexes, especially in the inner city are far more accepted these days. However most buyers will always prefer smaller boutique style apartment blocks.
Reserve Fund – check how much money currently sits in the “reserve account”, this money is used for major capital works required in the future such as painting, resealing pools, replacing lift motors etc. Do they have a 10 year plan in place?
Balconies – With our West Australian lifestyle and our love affair with the ‘Webber’ – generous sized balconies add good value to your apartment, embraced even further if there is a great outlook from the balcony. The balcony should offer a good degree of privacy and some shelter from our sea breezes and midday sun, bringing the outdoors in!
Size – Modern Apartments suffer less from the effects of the need for a bigger apartment and many inner-city apartments have been designed with minimal but exciting functional use of space.
The more compact apartments in the market, which have been cleverly designed, rent not much less than their larger counterparts and the resale value also doesn’t show such a great discrepancy. Once you move to the penthouse style then of course size will have a greater determining factor across all facets.
Age – This element is quite important, a brand-new apartment will offer the investor substantial tax benefits via deprecation whilst also potentially having less upkeep and being more in keeping with current trends to maximize rental return and resale figures and clearly as a home owner everyone loves brand new!
Whilst the latest designed buildings will be more likely to be smart wired, more energy efficient and more suitably designed for today’s modern and exciting standards. As a general rule all owners prefer a “newer” building.
Condition & Upkeep – as with the purchase of anything the presentation of the property should be paramount to owner occupiers and investors alike.
The presentation tells the incoming purchaser a lot, both the structure, the integrity of the building and how the property is being cared for. A qualified building inspection before your purchase could be some of the best advice.
Strata Levies – An in-depth look of the levies, the latest AGM minutes and a copy of the recent financial statements could give you an inside view as to how the building is being managed. If there are any pending items that could potentially require attention or substantial funds in the future.
Whilst these are a cross section of the most important elements for investing the leveling factor will always be price. The price of any particular apartment and the rental return will be a factor, which any investor will balance their view upon purchasing. It is advisable to give much greater attention to the capital growth factor then rental return as the impact of 1% extra capital growth over the life of an investment can be significant.
Go Green – In this day and age of zero carbon footprints everyone is seeking that their home or investment to have a high NABARS rating, use of insulations, glazing, cross ventilation, grey + rainwater, energy efficient light, solar power, edible communal gardens and so much more is expected from buyers today.
Future Proofing – Does your apartment building have delivery facilities/fridge for online delivery of groceries, a drone docking station, electric charging stations for all cars. One of my developers is designing an apartment block with a view to the future use of car parking areas as they deem there will be a large percentage of allocated parking areas which become reduced in the future with driverless cars, car pooling and working from home. Also, what about access for Robots to do all our cleaning, cooking, gardening, and house maintenance. And of course, super-fast internet connection optic cabling and smart wired buildings
The apartment building market is constantly and significantly changing completely”.