Serviced Apartments


Are there opinions on buying serviced apartments and 'renting' them to companies. I am referring to buying 2 bdrm apt and renting to QUEST (Townsville). This is the info I have:

Cost = $200,000-$250,000 (depending on apt)
Lease = 7% of cost for 2 yrs, the 4% incrase therafter per year
Lease = 5yrs initial (3x5 yr options thereafter for owner)
Owner responsible for capital costs (estimated at $5000 after 5 yrs)
Insurance, water rates, internal furnishings responsability of QUEST

I have persoanlly stayed in these apt for work previously and they are quite good. Location on waterfront, with great views.


Dr Kaos
Dr K.

I am an agent and have sold some serviced apartments.

In my view, stay away from one room types as they cannot be used for much else if the operator goes bust or ends the lease.

Watch for hidden costs that reduce the rental return.
Make sure you have a strong lease agreement. My preference is for a standard commercial lease applicable to your apartment only. I believe Quest has some kind of pooling system, and rent can be hard to determine.
Oakford have seperate leases spelling out options, rent review, etc, so that you know where you stand. As long as they are there, you know how much you are getting. This is vital if you ever want to sell. I have had problems, and do not take on any Quest properties due to the lease terms.
Tread cautiously, and have the lease scrutinsed be a solicitor and account. Proceed of happy.

Use a good operator. Quest is ok. Read the fine print, and watch what you pay, as some clients previously purchased and paid huge sums for furniture, and property is now worth much less.

If you decide to sell, your market is limited, and resale is governed by rent return.

Otherwise, great cashflow investment alternative with great tax advantages in the first 5 years.

Own a couple myself.

Sam Vannutini.