Are apartments a good investment?

OK, I realise that's quiet an open ended quiestion. I'm looking to buy my first place with the intention of moving in and renting out a room. Ideally I'd like to buy a house, but I'm also considering apartments. I've been told by some people not to buy an apartment because:

a) apartment prices are still dropping, more so than house prices
b) it'll be more difficult to sell than a house

Of course, unless somebody has a crystal ball, you're not going to know the answer. But what are peoples general opinons on this ? Would you agree with these points ? Regarding point b, personally I think area sells more so than if a property is a house or apartment. Somebody has even gone to say that buying a house in a "less desireable" area would be a better move than buying an apartment in a "good" area .... personally I disagree very strongly, unless of course the less desireable area happens to become an up and coming area

Lastly, what would you consider to be good rental areas in Dublin ? Obviously city centre apartments will always be popular. What about somewhere a bit further out, like Clontarf ? Is that too far away from town to be popular with renters ?

thanks in advance

You've forgotten management fees (and restrictive lease covenants in many places). I've seen fees for a 2 bed apartment be anything from €300 to €3,000+

It's standard in most apartment developments not to allow satellite dishes, washing on balconies, noise between midnight and 8am, pets etc - some developments are tied to specific companies for television and internet also. Add in poor building in some cases and lack of soundproofing - a house (preferably not one built since 2000) is a lot more attractive a proposition both from an owner/resident position and as something that will retain value.

Personally as a landlord of both apartments and houses I would not buy an apartment again I could give you a variety of reasons but they would be my personal reasons that I’m sure other people would disagree with as it is a very personal thing but I think a house is a far better investment especially in present situation.

Thanks for the replies guy. shesells, thanks for taking the time to list all those potential pitfalls - I've actually already thought of those (and to be honest, I feel some of them apply to houses aswell anyway). I already have a place picked out to be honest which I'm happy with in terms of living there etc. I've not made an offer yet, because my main 3 concerns are:
a) will it be more difficult to sell than a house
b) will I find it difficult to rent out the spare room, and if it comes to having to rent the entire unit for whatever reason, will I have problems renting it
c) Is it in a good rental area (I guess that's question b again really !) - if it's somewhere like Clontarf ? Would it need to be closer to the city centre to be attractive to renters such as young professionals ?

a house (preferably not one built since 2000) is a lot more attractive a proposition both from an owner/resident position and as something that will retain value

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Why is it you feel that houses will retain their value more so than a flat/apartment ?

Hans, thanks also for your input. I'd love to hear those reasons if you wouldn't mind sharing them with me .... what might be really important for you might not be such a big deal for me as I'll be an owner occupier (hopefully )

Thanks again

A house will have more space than an apartment and also more outdoor space (which is valuable). As someone who lived in owner occupied accommodation for years, I would much rather live in a house than in an apartment.

The apartment market is over-saturated, the bulk of the Celtic Tiger building was apartments. More competition more scope for prices to fall.

I'd imagine 1 bed flats in decent locations would have the best yield these days. They have lost proportionally much more of their value than houses I'd have thought.

murphaph said:

I'd imagine 1 bed flats in decent locations would have the best yield these days. They have lost proportionally much more of their value than houses I'd have thought.

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It has been said that banks aren't lending on 1 bedroom apartments, I think there was a thread on it either on here or boards.ie recently. Fine for cash buyers but anecdotally difficult for someone to get a mortgage on one.

There is nothing wrong with a good apartment in a good location in Dublin.

What are you buying, describe it, size, layout, balcony, location, amenities, facilities on site, state of the building, has it a lift, how many apartments in the block, management fees etc.

What rent would it achive. What is the yield.

What is the price, over what term. What is the drop in price from boom time.

I was following a good diary of a landlord in Dublin here.

http://www.boards.ie/vbulletin/showthread.php?t=2056694650

It hasnt been updated in a few months though, but it is very good.

Lots of questions and answers in it.

I have owned both. The biggest difference I found was the management company. In my case, the management company almost went to the wall, which almost prevented me from selling the apartment at the end. Fees were 1400 p/a which were not worthwhile.

I'm in a 90 year old house now. No management fees. I pay my own insurance and bin collection and happy with that!

I think an awful depends on your stage of life and what you ot your tenants need and want in a property. There are many people who would much prefer an apartment over a house, for example, some professionals who value thir time head of space, looking for somewhere close to work that's low maintenance; people who feel their money wil go further in an apartment; students; commuters etc

The OP was talking about an investment property though.

Investment proeprty can mean two things - capital appreciation and/or yield.

It's generally agreed that
-apts in good locations have a better yield than houses.Indeed, the dearer the house the worse proportionately is the yield.
-apts are not considered a good investment as regards future value, but that may because there were too many of them built in the same period and this lead nto a collapse in prices.

Having been a landlord for many years I confess I'm getting fed up of both apts and houses. Govnt interference and obstacles are making the whole business increasingly tiring and profitless. If interest rates go up in a few years then it really would'nt be worth it -either from rental or appreciation point of view.

Probably I'm in a gloomy mood as regards the business , so maybe ignore me -except do follow this advice....
... whatever you do don't repeat my mistake of getting older properties. Stick to new, well built, well insulated and absolutely in a good location. Increasingly, insuilation will be a key word for purchasers and renters -and govnt regulations.

Alexmartin said:

The OP was talking about an investment property though.

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An investment property that they plan to move into and to rent a room for a few years. Space and privacy is important in this case, making it not a typical investment scenario.

I too am an owner of older property, and it take a freightening amount of money to keep them in good nick. But I'm afraid of the newer apartments built during the boom as like Cashier mentioned a lot of them were not built properly and it's very difficult to find out which were well built and which will have problems. A good engineer is invaluable for this.

When i said "new" I also said "well-built, properly insulated". One must pay a few hundred euros for a really good survey -as well as your own BES survey,regardless of whatever BES the seller has.
Sadly, the survey will cost a few hundred euros even for a small apt because he should look properly at all aspects of the building.
However, that's still much cheaper than getting an old building up to todays' BES requirments -or fixing the myriad faults that can arise.