Investing in real estate is a pretty big step to take, so congratulations if you’re doing it. However, before making the leap, you need to educate yourself about the real estate market. Nowadays, there is a pretty high demand for studio apartments. More and more people are opting for this kind of housing for many reasons. If you’re asking yourself are studio apartments a good real estate investment, you’ve come to the right place. We prepared this detailed guide to answer all your questions about investing in this type of apartment. So, keep scrolling for some helpful information about smart investments and studio apartment perks.
Hire a realtor to help you with your investments
Before actually investing in a studio apartment or any kind of property, there are some things about which you should inform yourself. Luckily, we’re here to help you start this process with ease. First, you should be aware that this is a significant step you are taking, so don’t do it all by yourself. Hire a professional! There are so many important questions to ask your realtor before buying an apartment, so don’t hesitate to do so. You can only benefit from their expertise and knowledge on the subject.
It’s a common thing that inexperienced buyers face unpleasant surprises, especially when it comes to costs. So, as a first-time homebuyer, make sure to ask your agent about a deposit, insurance, property taxes, home inspection, etc. Don’t forget about all the construction codes and licenses you’ll have to get if you decide to renovate. These are all the things you’ll have to face as an apartment owner. Therefore, it’s better to be prepared than unpleasantly surprised later.
Benefits of investing in studio apartments
Now that you’ve hired a reliable real estate agent, it’s time to answer your essential question: Are studio apartments a good real estate investment? So, let’s begin!
Studio apartments are in high demand
More and more people are moving to big cities in order to prosper. This mainly refers to students and young professionals who are chasing success. When they come to a new city, they want an affordable and comfortable place, preferably downtown. Well, this is when studio apartments thrive on the real estate market. With lower rent and utilities and great location as well, they are the perfect choice for young people who are starting a new life in the big city.
Nowadays, a lot of students are choosing to rent an apartment over living in the student dorm. The main reason for this is the lack of privacy in the student accommodations. So, renting a studio apartment for a low price definitely pays off. The same goes for young professionals – living in a studio apartment also means having a private home office. And what more do you need, right?
With an abundance of young people seeking an independent life for an affordable price, the demand for studio apartments is going through the roof. This tells us only one thing: studio apartments are a good real estate investment!
Lower price and high rental yields
When investing in real estate, you have to think about several crucial things. One of them is rental yield – “the return a property investor is likely to achieve on a property through rent”. A good rental yield is considered to be between 5% and 8%. Since studio apartments are in high demand now, no surprise yields are so high.
Another reason why studio apartments are a good real estate investment is their affordability. Because they’re smaller than one-bedroom apartments, let alone houses, they come at a lower price. The average size of a studio apartment is 400-500 sq ft. But don’t worry, the open floor plan gives it the beautiful flow and openness everybody loves.
When it comes to real estate market predictions, experts are confident that rent prices will rise, as will the rental returns for investors. However, the studio apartments will remain affordable, so this is a win-win situation for both investors and people renting the studios. All you have to do now is make a rent agreement and find the perfect tenant.
Easy to maintain and redecorate
Less space equals less maintenance. This is one of the great benefits of investing in a studio apartment. As an investor, you’ll spend less money on the apartment’s upkeep; there won’t be so much stuff to fix and deal with. However, you have to make sure everything is in good repair. As the person living in the apartment, it means you won’t have to clean as much. After all, it’s only one room.
There will come a time when you’ll want to change your target group regarding tenants. The great news is you can do so much with this open floor space studio apartments offer. You can turn a bachelor’s pad into a cozy home or a student apartment into a modern home office, and vice versa. So, keep up with the current trends and prospective buyers, and your studio apartment will be an excellent real estate investment.
A drawback of investing in studio apartments
There are so many advantages that make studio apartments a good real estate investment. However, there is one crucial drawback you have to consider. Studio apartments are not liquid assets. Simply put, this means you won’t be able to cash out any time your want. On the contrary, you’ll probably have to wait a prolonged period to profit from this kind of investment. So, if you’re not ready to wait for capital appreciation and you need money fast, or your finances are not stable enough, this may not be a suitable investment for you.
Are studio apartments a good real estate investment – final verdict
All things considered, studio apartments are a good real estate investment. Low market prices, high rent yields, low maintenance, and growing demand are all great perks of studio apartments. However, don’t forget about the illiquid assets. It can be a significant financial strain you’re not ready for. So, think all this through, consult with your real estate agent and make a wise and educated decision. Happy investing!