Understanding When to Buy a Two-Story Investment Property

  • Posted 17 Sep
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Understanding When to Buy a Two-Story Investment Property

Are there circumstances where it is better to invest in a single or multi-storey home? According to experts, it really depends on the market where you plan to invest and the types of renters you want to attract. Answering these questions can help you determine which works best for you.

Where do you plan to invest?

In some cities where land is not as expensive, it’s still makes economic sense for buyers to purchase a larger sprawling one-storey home. Brisbane is a good example of an area where investing in single storey homes makes a lot of sense.

In high-density areas such as Melbourne and Sydney, investors will notice a trend towards multi-storey properties. Home buyers are purchasing smaller lots but still want to have a garden, so they build upwards.

The streetscape of the city and neighbourhood also plays a part. In hilly cities like Sydney, many builders construct two-storey homes to take advantage of the views. In other areas, single storey homes may predominate. Your goal as an investor is to choose a home that fits in well with the character of the neighbourhood so that you’ll be able to easily attract renters.

Consider local demographics

In suburban areas especially, renters are looking for ways to get the most living space for their money. These areas mostly attract families, who like the idea of having two storeys as a division between children and parents. Often, the master suite will be located downstairs to provide privacy for parents.

In young, hip areas, a smaller single storey property may be easier to rent. In this scenario, buyers don’t have the income for a larger space and aren’t planning to live with a large family. So it pays to look at the demographic mix of the neighbourhood before deciding to invest in a certain property.

Is the home well designed?

A two-storey home may not feel more spacious if the space is not laid out well. A staircase takes up extra room, and homes with impressive multi-storey open living areas may actually feel cramped upstairs, with too many small bedrooms squeezed into limited space. When deciding to invest in a two-storey home, make sure that the staircase is safe but has a minimal footprint and that rooms are liveable.

Final verdict?

Given all the variables, it is true that two storey homes often make a stronger long-term investment. They are typically larger and rent for higher rates. And depending on local zoning regulations, you may be able to divide the upper and lower storeys into a duplex property to increase rental income.

The obvious exceptions are areas where land is plentiful and areas that tend to attract a large retiree population. In these areas, single storey homes are prevalent and are more likely to be rented. But in dense city areas, you’ll probably see a better return over time by investing in two-storey properties.

Would you like to refinance your current home or do you need a mortgage for your next investment property? Australian Credit and Finance provides home loans every day to help individuals and families get the financing they need for their big investment. Contact us today!

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