It's a weird time when it comes to residential investment properties, particularly the home unit market. Residential property values across the country are flat at the moment as the market copes with a combination of factors . . . soaking up the oversupply after the boom, interest rate fears and, more recently, investors cashing out of property to top up superannuation before the end of June. On the other side of the coin, vacancy rates have plunged and rents are rising solidly.
But uncertain times can create opportunities.Many experts believe that after the superannuation windfall window closes, home unit values will follow the rising rents.Medium density housing has always been a great favourite of property investors because the hassles of maintenance are substantially handled by the corporate body. There is no doubt that home units or town houses are the residential investment with the least hassle. A good friend of my father's, who is also a prominent property expert, has always told me one-bedroom units are best because they are rented by singles or working couples who will look after the property better than a bunch of people sharing a three-bedroom place.
If you are buying for yourself the choice is subjective, but when investing there are rules to follow.The idea is to produce profit and this is done in two ways: capital growth and income through rental. A lot of investors tend to buy for capital growth and forget about the power of good rental returns.In times of low inflation and stagnant values, rental income can be an investor's best friend. So while location is the all-important factor for capital appreciation, "rentability" can be a different story. The premises should have the facilities to appeal to a large variety of people. Try not to specialise as you will only reduce your potential market.
Also avoid complexes which are overtly aimed at investors because this can have a detrimental effect on the overall building. Traditionally, owner/occupiers living on the property are more likely to take pride in their investment while tenants are not as likely to be so careful.Communal living at the best of times has its downside and the main problem is usually the communal bit. To combat the little spats between you and your neighbours there are a number of titles to choose from.
There are two main types of title. The first is the archaic company title. As the name suggests, this form of title operates in much the same way as a company would. Its original aim was to maintain a certain level of exclusivity among owners. To do this, owners meet and vote on whether a prospective tenant is suitable enough to be allowed to rent or buy the particular unit.With this sort of title you may even need permission to alter things inside your unit.Check the title thoroughly before buying because you are likely to be stuck with existing restrictions. The title is usually a fairly stagnant document and unless you can get the owners of the block to agree to the changes before the title is actually drafted, you will need a 75 per cent majority to change it. In a large block of units this can be a nightmare.The alternative to company title, and the more popular method these days, is strata title.
Strata title effectively separates each of the units into allotments and gives the owners separate ownership to do what they please (short of major structural work).But tread carefully, common areas are still administered by a body corporate and the title on strata properties is binding.It pays to be aware there may be additional clauses inserted at the request of all owners. For example, in one block of units I know, the strata title states that the clothes line cannot be used because it detracts from the beauty of the garden.
Legal experts suggest you get a copy of your particular strata title so you know where you stand should any arguments arise.Due to their restrictive nature and antiquity, company title units can sell for anything up to 20 per cent less than their strata cousins - and tough economic times could see the gap widen.So, while a number of investors are buying up company title developments with the aim of turning them into strata title units, tread warily. A lot of legwork and mathematical calculations may be needed to ensure the cost of conversion brings the price back to that of a comparable strata title block.
The best idea is to know your property and its title and to get independent advice. Don't rely solely on the real-estate agent or flashy marketing brochures. If you do, chances are you could be pouring money into your investment rather than reaping its rewards.
But uncertain times can create opportunities.Many experts believe that after the superannuation windfall window closes, home unit values will follow the rising rents.Medium density housing has always been a great favourite of property investors because the hassles of maintenance are substantially handled by the corporate body. There is no doubt that home units or town houses are the residential investment with the least hassle. A good friend of my father's, who is also a prominent property expert, has always told me one-bedroom units are best because they are rented by singles or working couples who will look after the property better than a bunch of people sharing a three-bedroom place.
If you are buying for yourself the choice is subjective, but when investing there are rules to follow.The idea is to produce profit and this is done in two ways: capital growth and income through rental. A lot of investors tend to buy for capital growth and forget about the power of good rental returns.In times of low inflation and stagnant values, rental income can be an investor's best friend. So while location is the all-important factor for capital appreciation, "rentability" can be a different story. The premises should have the facilities to appeal to a large variety of people. Try not to specialise as you will only reduce your potential market.
Also avoid complexes which are overtly aimed at investors because this can have a detrimental effect on the overall building. Traditionally, owner/occupiers living on the property are more likely to take pride in their investment while tenants are not as likely to be so careful.Communal living at the best of times has its downside and the main problem is usually the communal bit. To combat the little spats between you and your neighbours there are a number of titles to choose from.
There are two main types of title. The first is the archaic company title. As the name suggests, this form of title operates in much the same way as a company would. Its original aim was to maintain a certain level of exclusivity among owners. To do this, owners meet and vote on whether a prospective tenant is suitable enough to be allowed to rent or buy the particular unit.With this sort of title you may even need permission to alter things inside your unit.Check the title thoroughly before buying because you are likely to be stuck with existing restrictions. The title is usually a fairly stagnant document and unless you can get the owners of the block to agree to the changes before the title is actually drafted, you will need a 75 per cent majority to change it. In a large block of units this can be a nightmare.The alternative to company title, and the more popular method these days, is strata title.
Strata title effectively separates each of the units into allotments and gives the owners separate ownership to do what they please (short of major structural work).But tread carefully, common areas are still administered by a body corporate and the title on strata properties is binding.It pays to be aware there may be additional clauses inserted at the request of all owners. For example, in one block of units I know, the strata title states that the clothes line cannot be used because it detracts from the beauty of the garden.
Legal experts suggest you get a copy of your particular strata title so you know where you stand should any arguments arise.Due to their restrictive nature and antiquity, company title units can sell for anything up to 20 per cent less than their strata cousins - and tough economic times could see the gap widen.So, while a number of investors are buying up company title developments with the aim of turning them into strata title units, tread warily. A lot of legwork and mathematical calculations may be needed to ensure the cost of conversion brings the price back to that of a comparable strata title block.
The best idea is to know your property and its title and to get independent advice. Don't rely solely on the real-estate agent or flashy marketing brochures. If you do, chances are you could be pouring money into your investment rather than reaping its rewards.
