5 tips for buying the right apartment

Daniel McQuillan

If you plan on investing in an apartment over the next year, you're spoilt for choice. But not all of these properties are of the same standard, meaning investors need to be diligent in their selection.

 Blogger: Daniel McQuillan, executive director, Investwise 

This is because there is a high number of new apartment developments either underway or planned for Perth during the next 12 months.

And this trend is underlined by the latest ABS figures for apartment approvals in the city.

The figures show the total value of building approvals for higher-density homes, such as apartments, in Perth surged to $2.06 billion during 2014-15, compared with $1.37 billion for the previous financial year – a jump of nearly $700 million.

This increase in supply comes at a time when government agencies like APRA are making it more difficult for investors to secure home loans so that they can take the heat out of the Sydney and Melbourne markets.

Moving forward, there is a possibility that there could be an oversupply of apartments in some areas of Perth. Investors therefore need to undertake extensive research to select an apartment in a quality development that is in a prime location.

Research holds the key to building a successful property portfolio, as I have learnt from personal experience.

Buying an apartment in Perth can be a great long-term investment, but investors need to take a selective approach if they are considering buying one over the coming year.

Tips to consider when buying a Perth apartment:

1. Try to obtain some demographic data on who else has already purchased in the development. This will assist you in targeting the correct audience when marketing for a tenant. Most importantly, try to obtain the ratio of investors versus owner-occupiers. Too many tenants in one development can cause 'rent wars' by the time the building is complete. Multiple properties hitting the market at the same time will ultimately drive expected rental income down.

2. If you are buying a new apartment through a real estate agency, check their previous experience in the area that the development is located. If they specialise in this sector of the market and have extensive knowledge of apartment sales over a long period of time, it is more likely the property will be appropriately priced. Always ask if the development has a current independent valuation.

3. High-quality fittings, fixtures, appliances and overall aesthetics is an absolute necessity when a potential tenant is inspecting an apartment. Low-quality fittings and appliances could cost you more in maintenance and repairs once the warranties have concluded, so spend the extra dollar for quality. Ask to visit the builders' display or showroom to physically view their standard of fittings and fixtures.

4. Ensure that the apartment has secure, undercover parking, and that the dedicated bay(s) are located in close proximity to the entrance or doorway to the apartment. If the car bay(s) are too far away, it may affect a potential tenant’s decision on whether they rent the property or not.

5. If you are buying an older apartment (which I don't recommend for investment purposes), check if the complex has any plans for upgrades like security parking or refurbished common areas. This could increase the value of the property and make it more appealing to potential tenants.

Read more: 

The next two suburbs to boom 

Would your home make a good investment property? 

When is the best time to renovate? 

Daniel McQuillan

Daniel McQuillan

Daniel McQuillan has held senior positions in the property and financial services sector for over a decade. During that time he has gained professional qualifications and a wealth of experience that has enabled him to personally build a very successful property portfolio based on a targeted plan. In 2011, he established Investwise so he could utilise these skills to help other people create wealth through similarly devising a personal investment model that best suited their personal circumstances. As a result of this targeted and personal approach to property investment, Investwise is now one of the fastest growing property investment advisory services in Western Australia.

Further information can be found at www.investwise.net.au

5 tips for buying the right apartment
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