When it comes to buying and investing – a really good question to consider is whether an apartment or townhouse is a better choice. Furthermore, how an apartment or townhouse body corporate can help you move forward in 2023.
Both property types will be a lot more affordable than a freestanding Torrens-titled house as both have been created through a process of subdivision and both are part of an owners corporation. This can be better understood through our new body corporate management process.
But, here is what to look out for when choosing an apartment or townhouse body corporate:
- Rental Yield and Rent Prices For An Apartment Or Townhouse
- Apartment or Townhouse Body Corporate: Other Factors & Considerations
- Owner Corporation Fees Are Often Lower For Townhouses
- Buying Into an Owners Corporation For an Apartment or Townhouse
- Reviewing Your Apartment or Townhouse Body Corporate Solutions
Rental Yield and Rent Prices For An Apartment Or Townhouse
According to the REIV, the median rent in Metro Melbourne as of the end of March 2021 was $480 per week; giving a rental yield of 2.7%.
The data as presented by the REIV also shows that the number of bedrooms is a large factor when it comes to the rent that investors receive and that tenants are willing to pay:
| Median rent by Bedrooms | Metro | |
|---|---|---|
| 2 Bedrooms | $500 | |
| 3 Bedrooms | $450 | |
| 4 Bedrooms | $500 |
Furthermore, the below graph from the Real Estate Institute of Victoria (REIV) shows the growth of houses vs units in Melbourne for the past 5 years:
Apartment or Townhouse Body Corporate: Other Factors & Considerations
- Townhouses are often built with shared partition walls and many will have a yard at the back and a garden at the front which can be a big drawcard.
- Townhouses will allow investors to individually depreciate their buildings by obtaining a depreciation schedule.
- Apartments are more ‘set-and-forget’ for investors and tenants as the owners corporation takes care of all the cleaning, caretaking, gardening, and servicing of equipment/assets/facilities/amenities.
- Medium to larger apartment buildings will typically have a gym and a pool which can be attractive for prospective residents.
Owner Corporation Fees Are Often Lower For Townhouses
The owners corporation fees for apartment buildings in Victoria are on average $2,000 to $4,000 per annum whereas body corporate fees for townhouses are typically $1,500 per annum.
The biggest factors in how much the owners corporation fees (or body corporate fees) are the extent and types of common facilities and amenities (the lifts, pools, shared garage doors, essential services equipment, caretaking, gardening, building insurance etc.).
| Average estimated selling price | Average weekly lease | Estimated owners corporation | Depreciation benefits | |
|---|---|---|---|---|
| Newer Townhouses | $735,000 | $400 | $1600 | ✓ |
| Older Apartment | $545,000 | $380 | $2500 | ✘ |
Body Corporate Fees Townhouse / Owners Corporation Fees For Apartments
Buying Into an Owners Corporation For an Apartment or Townhouse
Investors and homebuyers should always be mindful, regardless of whether it’s a townhouse or an apartment, that they’re not just buying a property but also buying into an owners corporation.
An Owners Corporation (formerly known as Body Corporate) is an entity in its own right and every single owner is automatically a member of that entity. The Owners Corporations runs the AGM, sets the budget, collects the levies, maintains the common property, renews the building insurance (including public liability and associated insurances), enters into services contracts, and conducts all other facets that relate to the building (that isn’t private lot owners’ property).
Reviewing Your Apartment or Townhouse Body Corporate Solutions
Due diligence and choosing carefully are important especially when it comes to an apartment or townhouse – have a read of our article for an example of where things didn’t go right and how you Don’t Trust a One-man Band with Your Money.
Strata Management Consultants specializes in advising and guiding Committees on how to change owners corporation management companies. Get in touch at 1300-917-848 or via email at office@strataconsultants.com.au.
The content in this paper is intended only to provide a general overview. It is not intended to be comprehensive nor does it constitute investment advice. You should seek professional advice before acting or relying on any of the content.
