Oversupply in some parts of Australia is making it tough to successfully flip apartments, but there’s still money to be made.
It comes down to picking the right apartment, according to one expert.
Justin Dunne, a licensed real estate agent, buyers’ advocate and director of Melbourne-based firm, Independent Property Brokers (IPB), looks at which apartments are better to flip.
“Any apartment can be flipped, provided you buy it at the right price, can renovate well for the right price and can provide a product that the buyers will love,” he says.
Dunne says two-bedroom art deco apartments are the Holy Grail, because buyers with deep pockets tend to fall in love with them.
Two-bedroom art deco apartments are the Holy Grail. Picture: realestate.com.au/buy
“They’re usually in blue-chip suburbs and present great opportunities for young busy professionals with good incomes or downsizers who love their style.
Sometimes you see them go for nearly as much as some single-fronted cottages,” he says.
Buying a two-bedroom apartment with a dining room, and converting the dining room into a bedroom is another tactic flippers can employ, Dunne adds.
“You hear a lot of news about top-end apartment block owners buying the one next door and making two apartments into one big one.
There are plenty of cashed-up downsizers looking for space after selling their large family homes,” he says.
Dunne says “basic” two bedroom apartments tend to have a price ceiling, unless they have something unique, like a good-sized courtyard or a garage.
An apartment in an established building is better to flip than a new one. Picture: Getty
Buy established, rather than new, is his tip. “We recommend buying older apartments.” Also look for smaller blocks with reasonable owners’ corporation fees.
“You need to do your research on these older apartments though, as a lot of these apartments are getting to the age where they require major works, such as roof replacement, plumbing replacement, underpinning or window replacement, all of which are quite costly.
“Newer apartments suffer too much price volatility for the first eight years of their lives, the build quality is not as good, you can usually hear your neighbours through the walls and the owners’ corporation fees tend to be much higher,” Dunne says.
Location matters, too.
“We follow the philosophy of buying as close as you can to the CBD that your money will allow you.
We are more focused on buying townhouses and villa units than we are apartments, and believe some form of land component is essential to achieving good growth,” Dunne says.
He says property growth, when selling or leasing, is driven by demand.
“Demand is ignited by being close to infrastructure such as schools, shops, transport and lifestyle streets. People will fight to be close to these things,” Dunne says.
“This is why you have to buy at auction in inner Melbourne and compete for a property and why you can go to outer suburban house and land package areas and buy one of hundreds of properties off the rack without the infrastructure in place,” Dunne says.
Try to buy in a location that’s close to schools, shops, transport and lifestyle streets. Picture: Getty
Justin Dunne’s golden rules of buying apartments
- Choose established over new.
- Never buy on the ground floor, unless it has a good courtyard.
- Get better security and privacy by buying off the ground floor.
- Off-street parking is a must.
- Outdoor space is a must, either a courtyard or at least a balcony.
- Look for a good floor plan, where bedrooms are not off the living rooms. It’s preferable to have an entrance hall, bedrooms away from living areas and an ability to create an open plan living/dining kitchen.
