One bedroom apartments: should you invest?

With the property market finally softening enough to allow home buyers and property investors back in, many are tempted by one bedroom apartments as a practical and affordable way to start investing in property. Although affordable, traditionally, one bedroom apartments have been seen as a less desirable option, but does that still hold true?

The simple answer is: no. One bedrooms are a great investment option, and actually offer a great ROI in cities like Sydney and Melbourne. Here’s what you need to know if you’re thinking of investing in one.

Ten years ago the more space you could get the better, but we’re increasingly seeing smaller, more convenient apartments gain popularity and give increased ROI. With more single-person households than ever before, a later marriage-age and an huge uptick in the desire for inner city living, small apartments are a solid choice.

If you’re thinking of buying a one bedroom, there are some critical components to consider. Below is what our agents look out for:

Location

We’ll start with the obvious. Ideally, you should only consider a one bedroom property if it’s as central as possible - as a rule of thumb, no further than 5km to 10km from the CBD. People are prepared to sacrifice inner-city living for more space, but if they’re considering a one bedroom they’re typically looking for something very convenient and close to work.

It also helps to ensure that the property is within walking distance to surrounding amenities. The demographic that’s interested in one bedroom apartments is going to want to be close to things like cafes, restaurants and dry cleaners. If the kitchen, living and laundry areas are very small, then it’ll make a big difference to have places that fulfil these needs close by.

Style

When it comes to picking the building that the apartment is in, try to avoid overdeveloped areas and generic high-rises. The oversupply of similar or identical apartments will affect the capital growth and rental value of your property. Instead, embrace older, smaller and boutique apartment complexes.

Whenever you’re buying an apartment, it’s important to get as much information as possible about the popularity and desirability of the entire building before you commit.

Size is another thing to think about. While one bedroom apartments are generally small, you don’t want to get anything under 50m2 because most lenders won’t finance such small spaces and you may find it harder to resell.

A balcony is a very desirable feature when it comes to smaller apartments, as is any extra storage space in the building, a parking space or a split-level apartment.

Amenities

A quick note on parking: an apartment without a parking spot can be harder to sell if it is not near amenities and transport. If you don’t have a car yourself, getting a apartment with parking is still useful in the short-term, as the parking place can often be rented out.

If you don’t have an option to get parking, ensure that the surrounding area is very well serviced by public transport.

Views

Views are appealing for any property, but they count for even more when it comes to small spaces as they can make them feel bigger, lighter and less boxy.

Water, city and garden outlooks are all desirable when it comes to apartments. With that in mind, it’s worth doing some research into the level of risk of losing the view to a neighboring development.

Faced with a steep entry point, especially in Sydney’s inner suburbs, many buyers have been eyeing one bedrooms as a way to get into the property market while the going is good.

The good news is that one bedroom places are no longer the bottom of the pile when it comes to property, and the data is showing that they have also experienced solid growth over the past 5 years..

The market hasn’t been this buyer-friendly in years, and nobody knows just how long it’s likely to last. If you’re wondering whether to hold out and save until you can afford more space, or jump in and buy a one bedroom now, we’d say go for it.