All Topics / Help Needed! / Apartment in Brisbane city to run as Serviced apartment

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  • Profile photo of psinhainpsinhain
    Member
    @psinhain
    Join Date: 2012
    Post Count: 3

    I am considering buying an apartment in Brisbane city CBD area(Off Plan). I wish to run it as a serviced apartment to get the maximum returns. Has anyone got any experience in doing this ? How do you manage the advertisement, bookings, keys handover etc?

    Any comment on yield per year or property appreciation would be highly appreciated.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    I don’t know much about the OTP market in Brisbane but I wouldn’t be in a rush to purchase something OTP down here at the moment. Do a quick search on OTP or off the plan and you’ll get some good threads about the pros and cons. As for serviced apartments – most investors run for the hills.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Certainly more to it than meets the eye, included with your ads, bookings and key handovers are :
    key returns, email and phone enquiries,deposit payments, balance payments, extending for extra nights queries and payments, refunds, complaints, cleaning, maintenance like blown lights leaking taps noisy leaky cisterns missing bath plugs, .
    If someone else does these for you they will take the cream.
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of NuchaNucha
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    @nucha
    Join Date: 2012
    Post Count: 8

    If this development is located within the Brisbane CBD then the developer will no doubt install a resident manager either by selling the management rights or by entering into an agreement with a commercial manager. Either way, there will be someone onsite willing to organise the letting and everything else for you ….. at a price.

    If my memory serves me correctly the short term letting (management) fee is around 17.5% plus you will have numerous additional costs such as advertising, cleaning costs, linen costs, internet/video/entertainment levy, credit card charges, telephone, postage, refurbishment levy (obviously you’ll have to fully furnish at settlement too), travel agency commissions ….. the list goes on. Plus you will have your regular expenses such as rates, water, body corporate levies, insurance and vacancy rate. At the end of day expect around half the income will go out in expenses.

    On top of that you can expect to only sell to another investor as who would want to live in a ‘hotel’? Owner occupiers are reluctant to buy in these buildings so you’ll have a limited market to sell to. Capital gains will be ordinary, just do some research on comparable buildings completed in the past.

    My advice would be run a mile.

    Profile photo of psinhainpsinhain
    Member
    @psinhain
    Join Date: 2012
    Post Count: 3

    Thanks everyone for your valuable insights.  Do you know of an owners associations for these apartments? If there are a few  apartment owners and they all want to run it as a service apartment , we can cut down the cost significantly. We can hire one or two people(agent) to take care of a bunch of apartments in the city. We can share a set commision with the agent and even if you take 65% occupancy rate and all other expenses that you guys have mentioned above, it still looks lucarative. Am I missing anything else?

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