• Melbourne Mortgage Advice

Looking for an investment apartment?

Updated: Jun 29

Are you looking to get into the property investment scene? Purchasing an investment apartment is often a great place to start. Apartments are traditionally cheaper than houses, and depending on where you look, there are usually more of them to choose from!


But first, let’s look at why good things come in small packages when you are talking investment properties.

An apartment is usually far cheaper than a traditional house. This is because the cost of buying a house includes the land value, and therefore has a higher entry price than a small apartment. And then there are the ongoing costs, which will be different for a house and an apartment. With an investment apartment, you own the unit, but common areas will be shared with the other owners. This means that you will be a member of a body corporate scheme or something similar and you will be required to pay body corporate fees for repairs and maintenance of these common areas. Sharing the costs with the other owners means that you won’t have to pay them in full, unlike with a house where you shoulder all the costs. Council rates are also higher for houses, and they even require land taxes in some states. So, when you are paying smaller fees on a small investment apartment, the returns on your investment can potentially be higher.


But how small is too small?

Apartments can go as small as a studio or one-bedroom units less than 50 sqm. Many lenders won’t finance properties as small as these, along with small space properties in high-rise, high-density developments. If you’re already eyeing a potential investment apartment, it’s to best to speak with your mortgage broker before making any decisions.


Now that you know the benefits of buying an investment apartment, here are our top tips on finding the one that is right for you:


Research the right location

Location is one of the most important factors to consider in choosing the right property for investment. Depending on your strategy, you would most likely want to invest in an apartment where demand is high. Small space apartments are usually in-demand in locations where young professionals are, when you look at days on market for metropolitan dwellings. Look at the city centre, employment hubs, universities, and popular nightlife destinations, as well as areas where these places can be accessed via public transportation. Also consider what other properties are in the immediate area of the apartment, and of course, the level of security.

To get to know a location better, talk to real estate agents and property managers. It also helps to ask the right questions:

  1. What drives the local economy?

  2. Is there employment growth?

  3. Are there new developments in the area that may cause apartment oversupply?

  4. What is the historical growth of property prices in the area?

  5. What are the current rental yields on apartments?

  6. What is the median price of properties in the area?

Your mortgage broker can also provide a comprehensive report on any location you are interested in, chat to us if this would be helpful in your apartment hunt!


Analyse the market data

Data gathered is only as good as how it is used. When analysing the market data, your aim is to find a location where you can maximise the profit potential of your investment apartment. To make sure you are interpreting the data right, ask your experienced mortgage broker for assistance. Some indicators of a good location include:

  1. Days on the market or how quickly the properties sell in the area.

  2. Vacancy rate or demand to supply ratio. Is there much competition amongst renters?

  3. The rental yield or the percentage of the property price you can collect in rent.

  4. Auction clearance rates. Do sellers need to reduce the price to get a sale?

  5. Limited available property. When demand exceeds supply, it will likely drive future capital growth.


Count on your reliable mortgage broker for guidance

As your mortgage broker, we are dedicated to helping you make the right lending choices for your investment and assisting you every step of the way. Depending on your current financial situation and investment strategy, a small apartment can be a good way to start, especially for a first-time investor.


Having a good mortgage broker by your side can make a huge difference when looking for finance for an investment property. We’ll help you find the right loan appropriate to your needs. Get in touch now, so we can help you crunch the numbers!

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