Studio Apartments can split a crowd of property experts; while all acknowledge they can be a good investment, some would say a one or two bed would be favourable.
I firmly believe that a cleverly designed, well located studio apartment in the can punch above its weight as a buy-to-let opportunity, as long as it ticks the right boxes.
Property Investment Q&A #4: Should I invest in an area I don’t know?
Here’s what to look out for when choosing a studio apartment as your investment property.
Good Design
Built in Storage: Floor space is a luxury in a studio and it may be difficult for a tenant to fit in a wardrobe etc. Look out for built in storage that provides a solution to this problem.
Light: Ensure that the living space is light and airy, making the studio feel larger and liveable.
Separated Bedroom: Studios with a divide between living and sleeping areas will be more appealing to tenants; after all, who wants to sleep in the kitchen?
Affordability & Demand for Tenants
Affordability: Overall, studios are aimed at tenants with budget in mind – ensure that the proposed rent per calendar month is affordable for the location.
Demand: How many other studios are there for sale in the area? Will your property be filling a gap in the market or is the market flooded with similar studios?
Good, Long Term Investment Opportunity
Yield: Studios should earn a higher yield than their one and two bed counterparts.
Capital Growth: Capital growth is usually a little slower with a studio apartment, so bear in mind that a studio should be considered as a longer-term investment.
February House Price Index: Supply remains close to record lows
Maintenance costs: Studio apartments tend to attract a more transient tenant, who tend to rent for around 12 months. This can lead to more wear and tear, and higher maintenance costs – however this is balanced by the space being smaller and cheaper to maintain.
Every investment decision must start with your goals and financial situation. Determine what you can afford to buy and then from there, develop a property strategy – remember to include studio apartments in your plan!
