Hi,
I am a Sydney resident and have come across multiple serviced apartment investment opportunities.
They are usually a studio with a bath and without a car park.
Most offer a long term lease (5 – 10 years) with options of extending and a purchase price that is on the lower side.
e.g. Here is an example
Price $285,000
Guaranteed rental yield 6 to 7%
Most outgoings paid by the serviced apartment company
I just want to check if there are people out there who have actively taken advantage of these opportunities. Is there a catch with these properties? Are they hard to sell if you wanted to?
Catch is limited capital growth if any, I would never invest in one.
Cheers, Ivan
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manadeep wrote:Hi,I am a Sydney resident and have come across multiple serviced apartment investment opportunities.
They are usually a studio with a bath and without a car park.
Most offer a long term lease (5 – 10 years) with options of extending and a purchase price that is on the lower side.
e.g. Here is an example
Price $285,000
Guaranteed rental yield 6 to 7%
Most outgoings paid by the serviced apartment company
I just want to check if there are people out there who have actively taken advantage of these opportunities. Is there a catch with these properties? Are they hard to sell if you wanted to?
Hard to sell + lack of Capital growth if any as mentioned.
I saw one for Quest in Haymarket sydney, was advertised for under $520,000 now it's under $450,000 and still haven't sold 1 year later lol
Mick C | Shape Home Loans
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Google "serviced apartments" and you'll find LOTS of info. Or "serviced apartments Sydney".
We looked at one in 2008 and bought a VERY SMALL 1 bedroom unit in Potts Point instead. The serviced apartments have gone up very little in 5 1/2 years. Our unit has gone up at least 50%.
Management fees are usually quite high.
There is a limited market for them as they are investor driven.
Hard to off load in a good market let alone in a bad one.
Lower LVRs = bigger deposit
I would call them junk investments.. I think there are better places to put money.
usually huge Body Corporate fees
Stay Away If you Can..
Not A good Investment
I agree with everyone else they are a terrible investment
Also in many cases they will be deemed as a commercial property so you will have to put more cash down.
Also keep in mind that rates are at record lows however they will go up again in the next 12 months. Almost no capital growth, there are really no great reasons to buy these types of properties
Nigel Kibel | Property Know How
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Guaranteed yield 6-7%.
They don't mention the net yield in their figures do they. And they assume things like you pay a 20 percent deposit etc.
That is certainly a big problem in Australia as most quotes are gross returns. Only net returns matter
Nigel Kibel | Property Know How
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As everyone else has warned, generally not the best investment. Restricted LVR's, more difficult to sell, limited capital growth, high body corp fees.
Because of those factors, that's generally why they are cheaper than normal apartment alternatives.
Corey Batt | Precision Funding
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Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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