Thanks to stalling property prices and falling interest rates, buying a flat or an apartment remains one of the most popular ways for people to invest and set foot in the property market. A common misconception about property investment is that it always delivers good returns. While this is generally true, it certainly isn't a road to riches every time. You need to remember that there are some critical factors to consider that ultimately determine whether or not your apartment purchase will help you achieve your financial goals. Here is a checklist of factors you should take into account when scoring for a quality apartment investment:
#1 POPULARITY OF THE LOCATION
Before you close any deal relating to apartment purchase, put yourself in the tenant's position for a while and ask yourself whether you would ever want to pay rent for such a place. With this question in mind, consider buying in locations where tenants would prefer living, such as common lifestyle areas that are walking distance to shops, beaches and cafes. By this logic, apartments in Penang will definitely give you good returns in the future. However, those present at the heart of a busy town or city are likely to get rented faster. Why? Because flats and apartments in the city centre give people the chance to enjoy urban comforts at a reasonable price point. Also, many of these areas are in the vicinity of the station, airport, as well as office complexes, thereby allowing youngsters to save money and time in traveling. Long story short, whether you are buying a flat for your family, or investing in just a buy to let, make sure to think about the appeal factor of the location before anything else.
#2 PERFORM MARKET RESEARCH
Apart from easy access to modern facilities, the other reason to always purchase in major cities is the fact that capital growth is stronger there, as compared to rural areas and mining towns. Before you invest, research the market to ensure you're getting value for your money. In this regard, it helps to consult independent valuers and realtors, as well as check the trend of current sales in the area and of course the easiest way could very well be to use property search portal like PropertyGuru. It's advisable not to rely on the advice you get from the developer. This is especially important if you're buying off plans. Remember, your primary objective is to ascertain that the value of the complete apartment reflects what you paid in the first place. In case you are interested in investing in a rural area, do make sure that the area is being subjected to promising development works to establish vital transport links with main cities, and/or has tourist attractions that might appeal urban-dwellers. If both these criteria are met, then an apartment investment could probably turn out to be remarkably valuable.
#3 OPT FOR BOUTIQUE LAYOUTS
Any homeowner would want their apartment to have a unique layout, rather than an inconspicuous section of a ginormous complex with a boring structure. Thus, for a profitable apartment investment, try to evade those large developments that inhabit hundreds of properties. Popularly known as cookie-cutter homes, these tend to look the same and often lack the charm and plush building amenities characteristic to modern buildings. If you are on a tight budget, consider investing in a quaint and appealing studio apartment rather than a standard flat that lacks any unique factor. Your best bet is to opt for boutique blocks of apartments having a maximum of 17 units.
#4 REFURBISH TO ATTRACT INTEREST
It's a well-stated fact that people get attracted to rent homes that are renovated in an eye-catchy manner. While many assume that an apartment's layout is set in stone, the truth is that quick, low-cost and non-invasive renovations are quite possible. For example, you can split the master bedroom into two smaller rooms, or maybe put up patterned wallpaper. Additionally, you can swap outdated light fixtures for more stylish options, and add customized wall shelving to minimize floor space. A wee bit of renovation goes a long way to attract prospective tenants and enjoy a higher rental income. Even a simple facelift can entice people into paying a higher price of your apartment.
#5 LOOK FOR SAFETY
Apartments are considered to be safer than standalone homes or cottages, because they are part of a larger block, such as a gated community complex. Safety is an important consideration among buyers and renters alike, so you are better off investing in a property that has premium security, and is located in streets that aren't crime-ridden or dark.
#6 OPT FOR ECO-FRIENDLY HOMES
As people have become increasingly aware of their carbon footprints, the demand for environment-friendly apartments has naturally risen. Hence, if you want your apartment investment to bring in maximum returns in future, consider buying apartments in Eco-friendly locations, and built by Eco-conscious developers. These are generally built using non-toxic construction materials and come equipped with suitable ventilation systems for optimal air quality. Moreover, they enable you to reduce energy consumption and spend less on overall maintenance costs. And while these modern apartments might not have the charm of a traditional home, they are undoubtedly more efficient and even allow people to lower their living costs by a staggering amount. This simple fact can give you the chance to quote a higher rental price with confidence.
#7 ASSESS THE NOISE LEVELS
What's the noise level of the property like? Most people prefer a location that is adjacent to the subway or bus stop, and yet quiet enough to promote a peaceful environment for carrying out routine activities without any disturbance. It pays to visit the apartment at different times of the day to determine what the noise level is like in both the apartment, as well as the building itself. Remember, there'll always be plenty of neighbors moving in and some of them might even throw all-night parties with blaring music. Therefore, it's advisable to take a look at the neighbors before buying an apartment.
#8 CHECK THE VACANCY RATES
Current vacancy rates of a unit development can indicate how difficult it is to rent out your investment. Additionally, it will also give you a better indication of the rental returns you can expect to receive. If you are buying to invest then a high fraction of renters (i.e. low vacancy rate) suggests that the complex is popular. However, if you are buying to live in, then a high level of rentals probably means a high rate of changeover due to dissatisfaction with the availability of building amenities.
#9 KNOW WHAT TO EXPECT
Finally, don't get expect too much from your apartment purchase. Know that regardless of how much you spend on renovations, there will always be a maximum rate you can sell it or rent it out for. It's easy enough to figure out that rate- all apartment prices are linked by postcode. So, if according to the market, you can rent a two-bed flat for 230K RM, then that's the maximum you can rent it out for. Determining the market price of your property's postcode will help you get a better idea of what you should invest in, for a profitable Penang apartment investment.
#10 PLANNED DEVELOPMENTS
One potential factor that can impact the value of your investment is the presence of planned developments nearby. These are specially designed complexes that offer attractive land uses, such as recreation, housing, and commercial centers. That is why they are more sought after by people looking to rent or buy apartments to live in. A drive along the neighboring streets will help you understand if any such work is currently under progress. Additionally, you can check with the council as well, to know if there are any applications in the pipeline.
Whether you are interested in buying your first Penang apartment, or investing in a property, it always helps to do your homework well, and get independent advice before closing the deal. Additionally, you may want to be armed with a suitable range of financial options. By following the aforementioned tips, you will be able to maximize profits from your apartment investment in the long run.
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