Is investing in flats a good idea?
By Carl Agar
Thinking of buying an investment property? Wondering what type of property to invest in?
Well right now many savvy investors are putting their money back into flats and apartments. So what’s driving this behaviour?
Firstly, an advisory note, there are over 300 housing markets in the UK (in my opinion) and all have their own demands, so before you invest anywhere make sure you understand the needs and demands of the Town or City you are investing in.
A higher and more stable return
Having said that, in terms of flats and apartments there are many reasons to go down this route but one of the main points has to be that you are more likely to make a higher and more stable return on this type of investment.
The millennials market
It’s also worth considering the ‘millennials’ market. They prefer apartments and flats much more than houses - especially in cities on the up such as Leeds, Manchester, Birmingham, Newcastle and Glasgow in particular.
This because this tenant type is choosing to rent and wants the flexibility that renting offers in order to take up opportunities. Traditionally this market flocked to London to chase the dream jobs - but the growth of many large companies outside of London has created the demand in many other cities around the UK. Follow the companies, find the flats.
Be warned though this market is choosing to rent because they want to not because they need to and often can afford to buy so their standards are high!
Single parent families and divorcees
But it’s not only professionals that are chasing the apartments and flats. It’s also one parent families and divorcees. Recent years have seen tough economic times, and consequently couples that separate do find themselves seeking more affordable accommodation such as a flat or apartment.
So if we can agree there is a growing demand for flats and apartments lets also consider another big advantage - which has to be the fact that there is less maintenance involved and it is easier and quicker to build your portfolio.
Do It Yourself
My advice is to purchase the right buildings and create your own flats. If you purchase a small commercial office for example it can be converted into two one bed flats relatively cheaply.
By doing this you will save on VAT, increase your equity and very quickly be up and running with two investment properties on one freehold.
This type of investment is seriously worth considering but as always make sure you do your due diligence.