Why Apartments Are Risky - Newcastle Investment Property

If you plan to live in an apartment, the buying decisions are substantially different to buying an Apartment as an investment, here's why...

There's a really trendy block of apartments that's just finished being built in a really nice suburb. There are 10 floors and 37 apartments in total including 1 Penthouse.

The ground floor apartments start at $365,000 and they go up $10,000 every time you go up 1 level. You decide to buy a 3 bedroom apartment on the 6th floor and you pay $425,000.

3 weeks later, Bob buys an apartment on the 8th floor and almost directly above you for $445,000 and they have slightly better views of the lake than you do, but other than that, it's an identical 3 bedroom apartment.

5 years go by and now you can expect to sell at a handy profit. So, you put your property on the market for $545,000. That's a pretty good profit for 5 years isn't it?

2 weeks later, Bob and his wife separate and are heading for divorce. Another 3 weeks later, you still haven't sold your property and now Bob puts his 8th floor apartment on the market for $475,000! he's not interested in making a profit, he just needs to sell it quick so he can settle the pending divorce.

OH NO! Bob has just cut your price by $70,000 and he's got a higher apartment than you. Buyers are slow this time of year (it's winter) and Bobs not getting many lookers so he cuts it down to what he originally paid for it, $445,000. He soon gets a buyer and 10 weeks later it's settled!

Now it's on the record! An apartment sold for $100,000 less than what you want to sell yours for and all you are going to hear is, "the apartment 2 floors up sold for $445,000 so I'll offer you $400,000."

We're not saying that Apartments don't go up in value, because they do. But this is a true story about a property and what happened to the owner.

It's a good reason why you should do a lot of research BEFORE buying an Investment Property in a large block of apartments.

You can expect the ONLY apartment to build in value and keep it, is the Penthouse....because there's generally only 1 of them...it's unique.