High Rental Returns In Apartments Make Them A Good Investment
The real estate business in Australia hardly goes bankrupt. About 1.9 million Aussies own at least one investment property. The net residential dwellings value in Australia peaked at $9,901.6b in the current quarter.
However, housing prices are growing 11 times faster than wages. With the high demand and low income, people prefer apartments.
Investing in rental properties when it comes to apartments is surely a lucrative and risk-free strategy. For new investors, it is an unexplored area. However, the right approach can maximize the returns. Wise choices can ensure periodic cash flow and long-term appreciation.
Still unsure whether renting apartments is the perfect property investment opportunity? Well, you’ve come to the right place then.
The following article explores how high rental returns and other benefits make apartments a good investment. However, before diving into that, let’s understand the factors that govern rental yields.
2 Main Factors That Can Grow Rental Yield
Many factors are considered When going for a worthy real estate investment. Two of the most vital aspects that can ensure high ROI are listed below.
- Location
Proximity to schools, job markets, parks, medical, and other key facilities is vital. Therefore, location is the basic factor to assess the property. However, with time, a place may gain or lose its value. That is why it is important to consider the history, present, and future of the property.
- Values
Investment property consultants advise going through the “prospective outcomes.”
The profit-to-investment ratio decides the return on investments. A major analysis can be done by calculating the capitalization rate. It is the net profit you receive annually on the total property price.
Cash-on-cash return is another way to know the overall worth. A proper plan that involves a detailed calculation of value outcomes is crucial for increasing returns.
How Higher Rental Returns Make Apartments The Perfect Investment?
A good investment in rental properties, especially apartments, promises a high rental yield. This is because growing families, college students, and interns prefer rooms for rent than owning a home.
Homeownership is undoubtedly expensive today, especially in Australia. As a result, most of the population is now attracted to lavish apartments situated amidst bustling cities with facilities.
Renting out units or rooms of your apartments can together generate high returns on your investment. Thus, it can create a steady stream of side income effortlessly. Moreover, you can hike the rent gradually and benefit from higher profit margins as the surrounding locality develops further.
Other Benefits Of Investing In An Apartment
Asset Appreciation
Properties are subjected to value increase on an annual basis. Location is a major factor as it heightens the value of the overall apartment complex.
Furthermore, low maintenance and high returns are the reasons why investing in rental properties accelerates profit. It can also give high liquidity to ensure money take-out, as and when required.
Reduction In Debt
According to the Australian Bureau of Statistics (ABS), the average household property debt almost doubled to reach $168,600 in 2015–16. Thus, the ideal approach for investors is to go for rentals.
Net operating income (NOI) helps in the reduction of debt value on the property. Equity development is also easier when investing in apartments.
Extraordinary Tax Benefits
Whether you’re buying property in Sydney or Melbourne, investing in apartments can limit mortgage interest deductions. It also helps restrict growth in depreciation. Thus, you can maintain a happy cash flow directly into your pocket.
So financial freedom coupled with tax benefits makes apartments an ideal investment opportunity.
Solid Investment Portfolio
Looking to create an outstanding portfolio in less time? Investment in apartments is the way forward.
An apartment complex has at least five units, making a significant addition to your record. You can also easily outsource property management services. Especially, investing in multi-family apartments can give high rental returns.
Safer Investment
Investing in apartments and renting them out is one of the safest ways to generate side income without losing assets. It ensures profit while reducing the vacancies and enabling mortgage payments.
If you have invested in a multi-family apartment building, renting out a small percentage is enough to start making a profit.
Conclusion
A hike in demand for co-living situations and the need to live independently is why the value of rental properties values is increasing. This is also why yield in cozy apartments is significantly higher than in other segments of real estate housing.
Of course, the amount of capital involved changes the yield. But the maximum return on investment is observed by investing in rental properties.
Low capital appreciation and poor rental yield in other segments have badly affected the investors during COVID. With the immigration back to normal, people returning to cities for work or education, the dip has recovered.
Thus, keeping your wealth locked in banks won’t give as many perks as the right investment would.
Quarter Acre, one of the leading property advisory firms and home buying assistance providers in Sydney, can help you find the ideal apartment investment to achieve maximum rental yields in a short period.
