Almost everyone I know who bought a serviced apartment has regretted the decision, despite being initially adamant that it was a good deal due to the high cash flow.
Everyone is going to justify their decision no matter how bad.
They do the same for whatever stock they buy too. Just as they did buying RIO at over $120.
Even the so called experts had plenty of justifications, not to mention Mac Bank and the famous but not mentionable dollar cost averaging firm discussed on this forum.
So I disregard it because real "high cash flow" is hard to come across.
We even had experts touting on API that 6% on CIP was "high cash flow".
The people who I've seen make this work successfully tend to be the ones who purchase a property next door to some serviced apartments, then lease their property under a normal residential lease to the apartment managers. The apartment manager then takes on the risks of vacancies, repairs, etc. All the owner sees is a regular monthly amount hitting their account like every other regular IP.
If it's the same type of property then what's the difference?
They will require a long lease and actually pay less as a resi rental. the process is the same.
And when boom time comes both will rise in value. When recession hits, both will fall.
But yeah 40% deposit, and I made 5% return on buy price, after interest and 2.5->3% net after holding costs. And RE went up so I also made some CG.
The management fees were about 45% of gross earnings.
One of them I bought sold and never even walked on the premises.
It's no different to any other investment, no need to be emotional about it, it's just a numbers game and knowing about body corps and buildings.
I bought one only because the price was so low, i just figured that my worse case scenario would be a loss of 30-40K and I'd learn my lesson, as all those who I told were absolutely sure i would.
Truth was i didn't check my statement for 6-7 mths and realised that account had 30k sitting there.
But all I can say is that its dredging for gold...lots of mud, tons of mud for a lil nugget.