Investing in an apartment offers value for real estate investors in several ways, this article delves into the obvious and not so obvious benefits of purchasing an apartment over a house. Apartments are great for building a wealth focused portfolio which you can rely on, to grow in value and create cash-flow. But what are the advantages compared to a house?
Apartments are cheaper to acquire but have comparable rental yields, this means you can build a portfolio faster, compared if you’d be purchasing a house. If you’d rather have more money in your pocket overall, this may be the choice for you.
You will earn less rental income but have less expenses associated with upkeep and damage. Your insurance will also be cheaper and many of the costs can be shared with the tenant.
Apartments have lower maintenance costs this cuts less into your income budget, because they are smaller any improvements you make will typically be cheaper than a house. These lower maintenance costs will more or less be isolated and could be shared with the tenant depending on who the maintenance issues arise. These costs will not eat into your budget as you would have allocated a safety net in the form of equity in the first place.
Apartments are typically rented by people who are less than 35 years old, the same age group who are exposed convenience craze. If your apartment or prospect is located near public transport and or a supermarket, you are going to have an easier time finding tenants.
Young tenants tend to move around less, if your apartment is located near a hospital or a large shopping precinct it is likely that they are going to be working close by, you may be able to negotiate a longer lease with the tenant by offering them a competitive rate.
Whilst apartments are subject to strata fees and the rest, they are an option for people to enter the property market at a lower rate and build their portfolio. Building wealth through the purchase of an apartment is the first step for people on a budget that want to secure long term rental yields.