Let’s say I’ve got 2 apartment blocks in the same street– one costs $450K, the other $650K. The cheaper one has 4 1 bedrooms and the more expensive one has 4 2 bedrooms. If the % yield was the same, which would you buy?
Both!
Lol.
1 b’s are harder to rent out, can they be made into 2?, then the value goes up to 650k.
It also depends on how much you can borrow.
Get a partner and buy both i say.
The more the merrier.
Kevin
[email protected]thanks for reply
actually they cant be divided. and i must admit, i feel 1 bedders are easier to rent out….provided they are big enough.
everything always depends on where how when and who i guess, its really hard to make an opinion on somethign so vague, but then you put any details there and risk evil scoundrels trying to steal deals.
Kevin
[email protected]Evil scoundrels stealing deals!!!! The picture makes me laugh!!
CastleDreamer
% yield alone isn’t enough to base this decision on. Have a close look at the rental history (vacancy rates) for both, see which one is easier to rent.
If you bought the cheaper one you would still have $200 000 to purchase other IPs, therefore spreading the risk + increasing your net worth + increasing rental return ETC etc.Work smarter, not harder!.
Hi David,
All things being equal I would do as Cremin has suggested and use the spare $200K elsewhere.
However things are not always that straightforward – you may find one has greater potential for increased growth with refurbishment or there is better demand for a 1 or 2 bedroom property in the area, or one is undervalued in comparison to like properties or there is more potential to be more creative with one proeprty over the other.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Personally I would go with the cheaper ones, and here is the reason why…
Look at the recent boom Australia has experienced. A typical $600,000 property would have gone up to $800,000 over X months. Over those same X months, a $400,000 would likely have gone up to $600,000. You often find properties go up by roughly the same value, rather than the same percentage, which means the percentage for the cheaper one is higher.
This does not mean the cheaper property is always the best investment, however all things being equal (which they appear to be), the cheaper one leaves more scope for capital gain.
Dan.
Looking for positively geared property? Check out http://www.positivelygeared.com.au
As a rule of thumb – and in my experience, the 2 bedroom option should generate higher capital growth and higher yields.
Although supply/demand and location are key factors when comparing, we have a policy not to invest in 1 bedroom apartments for the above reason.
— Michael
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