MELBOURNE APARTMENT INVESTMENT

09-Nov-2017

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Author: apartment investing

Taking advantage of record low interest rates and strong returns on offer, investors are increasingly choosing property as their investment of choice.

With the Melbourne property market the strongest in the nation, apartments offer an affordable entry to property investment, with a range of different options to suit all buyers and budgets.

Once affordability and investment strategy is established, there are many benefits to investing in an apartment in Melbourne:

Tenant Appeal
Besides the attraction of a low-maintenance lifestyle, tenants of all ages love the convenience of living near quality infrastructure and amenities. On-site facilities such as a gymnasium or pool also offer significant tenant appeal. In fact, the City of Melbourne has the highest proportion of renters of any municipality in Mebourne, given its location as an epicentre of employment and education.

Minimal Maintenance
With no gardens or roofs to maintain, landlords are often surprised at the minimal maintenance required by their apartment rental investment. Whilst all internal features are still the responsibility of the landlord, the maintenance of all external features and communal facilities is managed by the Owner’s Corporation. Details of the standard maintenance on offer in an apartment complex can be found on the Owners Corporation certificate.

Affordability
With the average apartment price lower than the average house price in Melbourne, not only is the purchase price less for an apartment – the time needed to save an adequate deposit is lessened. This lower price point can also allow greater equity to be generated quicker and potentially capitalised on for another investment. However this relative affordability may not last as industry experts predict apartment values will soon catch up to house values, due to the growing desirability of low-maintenance living, and also as apartments become the main property type in the gentrification of Melbourne

Rental Yield
Apartments historically have generated better yields than houses in Melbourne, and modern or high-rise apartments offer an even higher rate of return. The average rental yields for an apartment was 4.52 per cent in Melbourne during the past quarter, compared to houses at 3.48 per cent according to Domain. A stronger rental yield will enhance the cash flow of landlords and allow them the option to positive gear their investment property if they so desire. This extra cash flow can also go hand-in-hand with capital growth if choosing to invest in an area with infrastructure development, an increasing population and strong employment.

Tax Benefits
The tax benefits of investing in an apartment are most often greater than that of a house. Due to the larger building size, apartments allow better depreciation and therefore are more beneficial in reducing tax liabilities at the end of financial year. Also many new apartments offer incentives, which can potentially be combined with generous stamp duty savings if the property will be initially lived in.

Our team at Lucas are proud to be Melbourne’s vertical living experts – for advice or assistance in investing in a Melbourne apartment, contact us on 9091 1400.