Buy to let – does size matter?
Yes it does. When property investing it helps to have a game plan on the type of portfolio you want to create. Will you buy houses, or apartments and what type of apartment ? Price of course will play a big factor but do not base your decision just on this. Presumably you have to rent out your apartment and this should be your main deciding factor.
Large apartments -I would never recommend you buy a 2 or 3 bedroomed apartment for the very simple reason that this size of unit will appeal only to a specific type of tenant and that means coping with void periods which will eat in to your cash flow. A void period is the time it takes you to find a new tenant when the old one moves out. On a bigger apartment it is not uncommon for the void period to be over 2 months long and that means you have to subsidize the mortgage for this period of time.
1 bed apartments – this is a sensible choice but the layout here is crucial. This type of apartment will typically appeal to couples as the rent is then shared between the two of them. To broaden the appeal though make sure the rooms do not interconnect and if possible try and get a seperate kitchen as this opens the field up to 2 students sharing the main rooms and having the kitchen as the only common area. This is now very rare in Central Europe as the fashion is for the kitchen and living space to be joined. Void period will usually be between 4 – 6 weeks in 1 bed apartments
Studios – this type of apartment appeals to the broadest range of tenants and usually the void periods will be minimal. If the apartment is empty longer than a month then you must be doing something wrong! For me though the best argument for buying a studio apartment though is the lack of availability in new schemes. 10 years ago in any new development studios would account for a minimum of 25% of the whole total. Today that figure has dropped dramatically to around 10 – 15% of the total. The reason for this is that people had better accessibility to mortgages so borrowed more money and purchased bigger apartments and the Developers jumped on this and designed to fit the market. With the scarcity of studios available you should never have a problem finding a tenant and more importantly once you come to sell the apartment you should easily be able to sell.
For more advice on purchasing an apartment as an investment contact me at www.prague-properties.com