Will Investing In A Small Property Provide A Good ROI?

Choosing the right small investment property is key to making a profitable investment. Thorough research is essential for success with any investment property. In this post, we examine how to conduct your research and select the right small space property to provide you with the investment property returns you desire.

Why Purchase A Small Space Apartment Or Unit As An Investment Property?

Purchasing a smaller investment property, such as an apartment or a unit, offers many advantages. Due to the higher entry price point of houses owing to land value, you may be able to buy an apartment or unit with a smaller deposit or with investment property loans. As opposed to houses, which typically have higher council rates and in many states also compel you to pay ongoing land tax, apartments and units can have much lower ongoing costs. The only expenses associated with a unit or apartment are the body corporate and strata fees.

Another cost that needs to be considered is maintenance. In contrast to an apartment or unit, where many maintenance costs are handled by the body corporate, all maintenance issues fall within your purview when you buy a house.

These factors suggest that a unit or apartment might be more advantageous from the standpoint of cash flow, especially for first-time investors. Additionally, if you complete further study, you may be able to find an apartment or unit in a place that will likely generate both excellent capital gains and healthy rental returns.

How Small Is Too Small?

One-bedroom and studio flats under 50 square metres are available in some developments. Before you sign a contract or put down a deposit on any property, talk with your Perth mortgage broker about it. Many lenders are hesitant to fund these properties as well as some small space properties in a high-rise, high-density complexes.

The Key To Success Is Research.

So how can one be certain that a given area would be highly desired by those who rent small spaces over long time periods? Singles tend to aim for small flats and units in busy areas. This may include the city centre and other bustling employment centres, colleges, districts with thriving nightlife, or first-rate public transportation systems that make it efficient to reach these facilities.

Consult with nearby real estate agents and property managers to learn more about a specific area. Basically, you’ll want to learn the responses to the following questions or concerns regarding your preferred location:

  • What is the state of the local economy?
  • Is there a rise in employment?
  • What is currently happening that will impact the area’s future supply and demand for small space real estate? 
  • Are there any upcoming new developments?
  • What has the local real estate market’s past growth rate been?
  • What are the current rental yields on homes for investment that are similar to the one you are thinking about?
  • What is the area’s median price for homes?

How To Analyze The Market Data

To maximise the return on your investment, you should analyse the data you collect to identify a place with strong capital growth and rental returns. Other strong indicators of these include:

  • Days spent on the market; How rapidly do homes in the area sell?
  • Demand-to-supply ratio and vacancy rate: Is there considerable competition among renters?
  • Rental return: How much of the property’s purchase price can be recouped in rent?
  • Clearance rates at auction: Do vendors need to lower their prices to make a sale?
  • Limited number of properties available: This may imply that supply is outpacing demand, which will likely fuel future capital expansion.
Looking for an Investment loan in Perth?

Keep in mind that a professional mortgage broker in Perth can be a valuable resource when making real estate investments. We’ll assist you in selecting the financing that will best meet your needs best while also preparing you for future investments. Speak with Finance Corp; we’d be happy to assist you with starting a small real estate investment.

To learn more about our investment loans in Perth and how they can help you begin your investment property journey, fill in our enquiry form online, call us at 08 9417 5550 or send an email to admin@financecorp.com.au today.