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Why are apartment complexes such hot property?

By Greg Bell

Investors with significant cash reserves should expand beyond the regular commercial and residential additions to their portfolio and consider buying an apartment complex on the Gold Coast. These types of property are very popular right now, with the significant outlay offset by major rental returns.

The difference with buying a multi-unit property over a house is that you have one investment and many streams of income from it (assuming they're all tenanted), rather than one property and only one revenue stream. That's not going to be enough to quickly build an investment portfolio.

If that's your goal, consider an apartment complex. Here's what you need to know:

Higher outlay, massive returns

The mean price of a residential dwelling in Australia is $681,100, according to Australian Bureau of Statistics (ABS) data from December 2017. If you invest three or four times that amount in a small apartment complex, you could have up to five different flats in one location.

Your rent from a single house might be as much as $405 in Brisbane (the average rent price according to Canstar), but you could charge around $380 per flat for each of the five homes in the apartment complex. You're almost quintupling your weekly returns, and the value of your investment is much higher.

Over time, you'll pay some of the mortgage off, freeing up equity to use for another investment. Your mortgage will be greater but your potential income stream is much greater also, meaning you could increase your equity faster. The initial cost of the investment for cashed up buyers could lead to a fast-growing portfolio on the Gold Coast.

Other investors are seeing the benefits of multi-unit properties

A great yardstick for measuring the success of potential investments is to look at what other buyers and developers are doing. Last year, a massive project was approved in Melbourne where one development company would build a 260-apartment complex, retain the ownership rights, and rent out the units long-term.

Salta Properties, the developer in charge of the project, is also building a 170-room hotel in the lower levels of the complex, according to a Sydney Morning Herald article from May 2017. The model for this type of development is popular in the US and UK, but is the first of its kind in Australia.

While your first multi-unit apartment complex investment is going to be on a significantly smaller scale, the concept is the same. Multiple streams of income from one property, all paying one mortgage and gaining equity for you to use in another investment.

For more information about buying an apartment complex on the Gold Coast, get in touch with Ray White Commercial Gold Coast today.

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