8% return in Portland

[firefox]

Quest Serviced Apartment Group-Portland - Limited Offering - 8.0% Return
No management fees, no rates, only outgoings body corp and sinking fund ( approx estimate $ 1000 total).
2BDR $196,000 (rent $15,697 pa- $ 302pw)

I found this in The Advertiser real estate section. What do you guys think?
More here: http://www.wilsonrealestate.com.au/Property-in-Portland/11039?s=e&e=&c=

 

[R377]

I would always be wary about someone offering guaranteed rental returns.
7% in Portland and 6% in Warrnambool shouldn't be too hard to find

 

[BV]

What are the management fees like?
I'm a bit skeptical of anything managed.....

 

[BuildingBlocks]

I think I have solved the mystery.

The 8% return is based on purchase price, however you are locked to a 5 yr lease. The first rent review will take it to "market value" rent and then 4% increases. Market will most likely be a fair bit less than 8%.

Today - $200k value and say $300wk.
2015 (last year of the initial lease period) - Say $300k value and still getting just $300wk.

I like the freedom of being able to choose who manages my property, who repairs it (this was not clear in the ad but you may not get a choice of tradesman, however it may be included in the fees they charge in the background ...as they aren't officially charging any management fees) as well as making modifications and renovating as I choose.

Clever marketing, or maybe I am reading the ad incorrectly.

 

[buzzlightyear]

Do a search on Quest, serviced apartments etc on SS and you will see plenty of comemntary about this option.

These investments have their place, but I suspect more in terms of a super fund which suit stable and solid yields. But Portland?

You are really investing in the strength of the business/brand.

 

[our obsession]

I would personally not be pursuing this line of property investment. Portland is not the issue (for me), but a 'serviced apartment', of which Portland's unit median price from 2008 was around the $160,000.

Personally I would prefer a stand alone IP, either house or unit 'on it's own.'

 

[Melbournian]

Quest Serviced Apartment Group-Portland - Limited Offering - 8.0% Return
No management fees, no rates, only outgoings body corp and sinking fund ( approx estimate $ 1000 total).
2BDR $196,000 (rent $15,697 pa- $ 302pw)

I found this in The Advertiser real estate section. What do you guys think?
More here: http://www.wilsonrealestate.com.au/Property-in-Portland/11039?s=e&e=&c=

u will make no money.

 

[firefox]

I think I will stick with stand alone IP.....anyway thanks for all replies