Investing in an apartment unit is a great idea and an exciting prospect. However, before you take the plunge and settle on a unit there are several things you need to consider and take into account before signing any papers. After all, nobody wants any nasty surprises along the way. Make sure you are completely prepared and in the know for everything that comes with investing.
Here are 6 important details you need to know and consider before investing in an apartment unit.
1. Expect Admin Fees and Hidden Costs
Before you invest in an apartment unit you ought to have a clear budget in mind. This will help to prevent you from spending more than you can afford. It is not just the price of the apartment you need to consider and forgetting about administrative fees and other hidden costs is a common mistake made by first-time buyers. When calculating your budget you should consider the following:
- Solicitor fees
- Monthly expenditure – gym memberships, food costs, TV subscriptions, petrol costs and so on.
- The deposit
It is a good idea to overestimate these costs as opposed to underestimate them, as this can put you in a difficult financial position.
2. How Expensive Are the Utility Bills?
Something you have to know before investing in a place is how much the utility bills are going to cost you. You could have an amazing apartment being sold at an affordable rate, but the utility bills could be sky-high. You must be as well informed as possible and so estimating utility bills is an important component in planning your budget. The key to investing in any property is to be well prepared, and extensive research and a well-thought-out budget will help keep you on track.
3. What Is the Location Like?
Location is one of the most important factors you need to consider before investing in an apartment unit. You want to be close to amenities such as schools, supermarkets, parks, gyms, transport links, and more. Even if you are not planning on living in the apartment, your potential renters will be checking the proximity of your apartment to amenities.
Additionally, you want to think about the long run and you should invest in a place that has potential for capital gains. Part of this will be researching the vacancy rates of the area you are hoping to invest in. If the vacancy rates are high then this likely means it’s not a desirable area for renters. So, if you are thinking about selling in the future this could reduce your selling price.
4. Know the Risks Involved
You should never invest in a property without having an awareness of the risks that can come with it. Take the time to research possible risks and if in doubt you should seek advice from a professional financial advisor or an estate agent. You might have to spend some money on getting the best advice but it is well worth it if it helps prevent you from a financial loss. If you are planning on renting the apartment out then here are some things you need to think about:
- Have you considered the expenses that may occur if you have conflicts with a tenant?
- Are you prepared to pay for legal fees if you have to evict your tenant?
- How will you financially hold yourself over if you are in between renters?
5. What Are the Maintenance Costs?
Maintenance costs include more than just your utility bills, and you need to understand and be prepared for all costs that come your way. When creating your budget you need to think about property tax, assessment tax, municipal tax, insurance, repairs, and property management fees. Once you have calculated an estimate of your expenses, you need to decide whether the expenses overwhelm your returns. If that’s the case then you should not invest your money in that apartment unit.
6. What Are the Benefits of Owning an Apartment Unit?
There are plenty of benefits to owning an apartment unit. You have the freedom to decide whether you want to live there or rent it out to someone else. Renting can be a great way to earn some extra revenue. Additionally, if someday you want to sell your property, you will make back the money you spent as the pricing of the unit will go up.
So there you have it, 6 very important details that everyone should know before investing in an apartment unit.