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For finding the right lease-hold or free-hold apartment in a sound building and managed by a functional body corporate, how do you start and what you need to know

 

Investing in Apartments

Buying the right Lease-hold or Free-hold Apartment

Land appreciates while buildings depreciate

 

Apartments close to amenities, jobs and public hubs are attractive for single person households and couples without children. The demand for apartments also reflects social and demographic changes. These demographic shifts open new markets for investors, too. But apartments as investment have their limitations. To understand you have to look at the title and note the relatively small portion of allocated land and building. You possibly know that good rental yields come with the compromise—low growth of capital gain and little control over the costs managed by the body corporate.

 

When you are certain that an apartment is right for you - read on because due diligence on apartments has its own specific. From previous articles you already know that risks depend on the level of control. That is one crucial point with apartments as the building is owned by the body corporate. Rights and restrictions to use the common areas in the building are regulated by the body corporate rules.

 

So, watch out for large high-rise blocks, large developments with an oversupply at the time of completion, problems with large difficult body corporate and steer clear of units in bad positions in the building (disturbance by lifts, obstructive or no views, noise). Be suspicious by offers buying off the plan.

 

 

Good Apartments—How to find them?

 

A good apartment for you has three important features; it meets your needs or purpose, is attached to a sound building and managed well by a responsive body corporate. If the building is a leaking building or the body corporate does not do its job—then you are already screwed. Apartment owners pay for the consequences, but can little do about it. So, be a knowledgeable decision maker. How to get value for money?

 

 

Your purpose to buy, location and needs

 

Professionals, singles, couples, families—all have different needs and for investment apartments that results in short term stays or long term tenancies. The location affects expenses for parking, public transport and the type of renters you can expect. Similar considerations have owner-occupiers, but maybe they avoid apartment blocks with the majority of investment (rented) apartments.

 

For investors the type of renters will affect the workload for managing rental apartments. Think of furnished studio apartments which have a high tenant turnover, student accommodations known for related problems, or buildings designed for families and city dwellers.  If size, location and price of the apartment meet your needs — part1—done.

 

 

 

Is the building worth considerations

 

For sharing a building (or property) with your neighbours you need to know the title (unit title, cross-lease or company ownership).  The type free-hold or lease-hold impacts capital growth and price. When you look at a lease-hold apartment with bargain price, be aware that the coming lease renewal is an unpredictable expense.

 

I do avoid buying new apartments off the plan and in new big apartment complexes for obvious reasons. The expenses for maintenance and repair depend on a pro-active and well managed body corporate—the bigger the less effective, when it comes to the individual apartment owner.

 

Quality has its price. For cutting costs some developers never seem to put out quality products, buying cheap appliances as bulk order with limited warranty. It is hard to get service for certain types of brands. 

 

The services for occupants in an apartment building are quite important such as hot-water, heating, electricity, wireless networks (WiFi), Freeview Television, cable TV and common grounds like a GYM, parking, and so on. Metered services are commonly charged to occupants directly while the rest needs to be paid as part of the body corporation levies.

 

For being confident and making the right decisions  check here out the due diligence process for apartments.

 

 

Body Corporate and Unit Titles Act 2010

 

Unit Titles Act (UTA) governs the rules determining activities around apartments where the body corporate owns the building and owners have property titles for the apartments and a share of the common property (building).

 

Third party hot water billing systems, increasing compliance costs introduced with the UTA 2010 and Body Corp management have been pushing up expenses in recent years.  That impacts occupancy rates and cash-flow for investment apartments. 

 

Ill managed Body Corporates, poor building management and high fees are likely to make it or to break it. Go to the article library and search for apartment blog posts or start with “What has changed for apartments owners”. Good luck

 

 

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Klauster Blogs lead to a real person, IT professional, investor, landlord and business owner with interests in technologies, properties and trading.

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His passion, making experiences available and helping people like you, comes from extensive travelling and the principles of life—how to avoid pitfalls in unfamiliar territory when investing or forming relationships.

 

The philosophy to treat life, partnerships and hobbies as an investment has helped people in his circle. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.

 

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lease-hold apartment or free-hold apartment