Should You Really Invest In A Studio Apartment?

Photo of author
Written By Adrian Cruce






Most people that want to invest in real estate think about the possibility of buying a studio apartment sooner or later. It is definitely an interesting prospect for the investor. That is mainly because of the really healthy yield possible through rental. The problem is that there are many situations in which this is the only attractive factor. You cannot simply buy a studio apartment, make some money affirmations and expect money to come in.

Studio Apartment Investment Hurdles

One thing that many do not know is that there are usually minimum requirements that are associated with mortgage insurances in correlation with floor space area. The units that have a floor space that is lower than 50 square meters should be avoided. There are some lenders that agree to a deal that is offered for a space that is higher than 40 square meters but that is quite rare.

Location of the studio apartment can also be a hurdle. It is important that you find property that is placed in a proper development area. Something that is located in a shady region is not at all a great investment in most situations.

Studio apartment purpose counts because many lenders will want to first see that the property made the change in order to accept any financing option. You can save a lot of cash when you renovate an apartment but when you want to repurpose a studio apartment, you want to do this diligently. That is due to the fact that management company performance will be seen as a highly important factor for the lenders.

Related Article:  Three Options to Invest in Real Estate in New York City

The last thing that should be added is that as you invest in several studio apartments, a management company would be necessary to take care of tenants and related problems that can appear. Do take that into account.

Studio Apartment Investment Advantages

As already mentioned, the healthy rental scene is a huge advantage that you will surely take into account. It is not at all difficult to find someone that would be interested in renting after you buy and you make minor modifications. That practically means that property downtime will be really low.

Obviously, one of the advantages is that you do not need a lot of money to buy a studio apartment as compared to larger apartments. This allows the investors that have a limited budget to afford their first investments, leading them towards profit and growth. It is difficult to invest in larger properties when the budget is limited. Studio apartments make the investment much more affordable.

Should You Invest In Studio Apartments?

The answer will be really subjective since what works really great for a person may not be that great for another individual. Professional real estate investors from will always tell you that you have to consider investing in studio apartments, especially when the initial investment budget is low. However, this does not necessarily mean that this type of investment is perfect for you. Do think about the hurdles and the advantages before you make your final decision.