In today’s world, it seems that everyone has become a property guru. With this being said, how do you as an investor know what not to buy? Here at Blue Wealth our research model automatically rejects inferior properties. Three of the elements we’ll discuss today are size, natural light, and exit strategy.
Being an investor, we often don’t get the luxury of choosing how our investment is designed. So, when we assess different properties, we take into consideration the liveability for a tenant or owner occupier. Features that set apart the good and the bad can be very small, but they can nevertheless impact your property’s performance. So, what should you avoid?
Small internal areas
When assessing a 1-bedroom apartment, anything with an internal size less than 50sqm is automatically rejected by our research model. The same applies to 2-bedroom, 2 bath apartments with an internal size less than 70sqm. Normally what we see with these inferior sizes is that they have unappealing layouts and are restrictive in living spaces. Also, from a borrowing point of view, most lenders impose restrictions on the minimum size of an apartment—not allowing you to borrow any more than 80 percent of the property’s value. Below is a Blue Wealth approved floor plan and a floor plan sold via an online platform.
Bedroom with no natural light
Bedrooms without external facing windows are often avoided by purchasers and tenants alike. Consequentially, we reject them. Tenancy laws generally stipulate standards for habitation. One is that rental properties have adequate natural lighting in each room. The idea of “borrowed light” from living areas reduces the liveability of a property. We generally see that apartments with a natural outlook or aspects are more sought after by tenants when it comes to the renting process. For example, below our model would disregard this type of floorplan as a 2-bedroom apartment, however a more accurate representation for this floor plan would be a 1-bedroom plus a multi-purpose room. This could work if it was priced accordingly.
Exit Strategy
Being able to have an efficient and effective exit strategy will ensure that investors maximize their profits and have minimal risks when selling their investment. Some projects that we approve come with residential amenity that not only creates interest from the local rental market, but appeals to the owner occupier market when looking to sell. At Blue Wealth we always try and tell our clients to hold onto their investments for as long as they can but when they do sell because of our research model our clients always have a good exit strategy.
Investors are sometimes misled into buying these properties from an affordability point of view. But you must ask yourself why, before you buy. The best investments are sometimes not the cheapest and that can show in your asset’s end performance. We always aim to give our clients access to the best properties, while leaving the inferior investments to the rest.
Great tips! Thanks for sharing your article.