Its no secret that real estate has been one of the best-performing assets of the millennium so far – and certainly the best since the financial crisis of 2008. But while many people are investing in low-level residential real estate, some are turning their gaze to the luxury condo market in the hope of scoring big bucks.
Joe Nahas, a property manager from Australia, did just that on a property in Sydney. He worked with a group of architects to build some high-rise residential units in a desirable part of town and then, once the work was complete, sold them in a matter of days. In fact, demand was so high that Nahas began selling condos in a second, as-yet uncompleted building. The total sale value ran into the hundreds of millions of dollars.
The problem for many people is that condos have historically been a perilous investment. Theyre prone to going up and down as particular parts of town rise and fall in their desirability. But with this increased risk comes increased reward. Here are some of the financial benefits you get from owning a condo.
Condos In Cities Have High Resale Value
Condos built on the edge of town might not be a great investment. After all, developers should only go high-rise if they have no option but to try to cram people into as small an area as possible. Condos build downtown, on the other hand, are a much safer bet. Theres a good chance that people will want to pay a premium for living in the middle of a major city, like New York or London, thanks to the convenience of being located near to commercial hubs. Prices in these inner-city areas tend to significantly outperform inflation. For instance, condo prices in London are up more than 10 percent on 2015, 8 percent higher than inflation.
Condos Are Easily Rented
Another great thing about condos is that there is alway a young professional willing to rent it out. Millions of people suffer on hour-long train journeys to work, thanks to the fact that rental prices decrease the further you go out of town. But some professionals, especially those who are doing well in their careers, are willing to pay a premium for accommodation to avoid these annoying inconveniences in their daily lives. Unlike their colleagues, theyd rather arrive at work fresh after a ten-minute walk downtown than sit on a hot, crowded train. This gives them a competitive advantage, since theyre not as exhausted from the journey.
Buying A Condo Requires A Lower Down Payment
The barriers to getting into the property market are often very high. Getting together the money to put on a down payment can be very difficult, especially if youre looking to buy a regular house. Condos, on the other hand, tend to be much cheaper on a per unit basis, making it easier to get over that initial hump and enter the property market. The money you save on the down payment can be used to fund another property purchase, increasing your assets.