Serviced Apartments

I know they're generally a 'no no' due to the difficulty in re-selling, slower CG etc, but has anyone here invested in one?

What's the usual PM rate on them? It's higher than usual right? I found one that's significantly CF+ and it's got me thinking that maybe, just maybe it's worth taking one on, as it would increase serviceability for future purchases.

Your thoughts positive and negative most appreciated.
 
no no no no no no don't do it,

do some research on the initial purchase price and the CG on a few serviced apartments and that should convince you.

PM the address and i will see what it last sold for and what growth it has had
 
RedCat

Have to agree with Bigtone (NO NO & dd I mention No), when these are advertised its like a Pokie Machine, it has big flashy lights only to realise they only pay 80 cents in the dollar. That is what these serviced apts are, try and speak to one of the existing owners and see how much all the additional costs are and whether they are making any money, then speak to a broker/bank and see ho easy it is to get a loan and what ratio is required. Whenever I here of these I always wonder if it was in the interest of the place to only manage the bulding and not own the room why wouldn't every hotel run this way.

Jezza
 
hi guys, i was actually looking at a couple, and i wonder as well

the one i am looking in flinder lane, serviced by quest apartment, cost is $230, 1 bedroom apartment, and rent pa is 20k/pa outgoing cost is $3500/pa (sinking fund, paint, etc).

the outgoing is where it stops me, other apartment that i have seen doesnt cost that much ($3k for 88 wells st), and that apartment itself have enjoyed quite a significicant growth in terms on rent and CG

that apartment still on market today, and that proves it is very hard to sell ( i was looking at it at the start of the year).

Havent check the finance side of it with bank.

Bigtone, have you got result of apartment that is sold on city ?

thx


no no no no no no don't do it,

do some research on the initial purchase price and the CG on a few serviced apartments and that should convince you.

PM the address and i will see what it last sold for and what growth it has had
 
Depends on the type of serviced apt.

If you get a 'regular' apartment (that you could sell to an owner-occupier), then it should be OK (as long as you have a good manager providing CF+ returns).

If you get a 'hotel room' (a small studio less than 50 m2, that it tied to the serviced apt business), then it's not so good. You can't re-sell to an owner-occupier, it's hard to finance. not much CG to expect.
 
hi guys, i was actually looking at a couple, and i wonder as well

the one i am looking in flinder lane, serviced by quest apartment, cost is $230, 1 bedroom apartment, and rent pa is 20k/pa outgoing cost is $3500/pa (sinking fund, paint, etc).

the outgoing is where it stops me, other apartment that i have seen doesnt cost that much ($3k for 88 wells st), and that apartment itself have enjoyed quite a significicant growth in terms on rent and CG

that apartment still on market today, and that proves it is very hard to sell ( i was looking at it at the start of the year).

Havent check the finance side of it with bank.

Bigtone, have you got result of apartment that is sold on city ?

thx

It sold in 2003 but price is not listed:mad:
 
I know they're generally a 'no no' due to the difficulty in re-selling, slower CG etc, but has anyone here invested in one?
Yep, don't remember it being difficult to sell.
What's the usual PM rate on them? It's higher than usual right?
It's much higher, and so is the rental income.
I found one that's significantly CF+ and it's got me thinking that maybe, just maybe it's worth taking one on, as it would increase serviceability for future purchases.
Your meaning of "significant" may be someone else's meaning of "a smigen".
Credit & inflation is not squeezing tight enough yet to bring them to my level.
It's kinda like buying CIP from my experience.
You need a high deposit >30%, and go through rental agreements/body corp docs with a toothcomb.
CG? 46% in 5 yrs + income. ROE >100%. So I more than doubled my money in five years.
For me it was an experiment, my plan being to sell in 2 years.
But I reckon I learnt maths pretty good in primary school, and it was'nt too bad.
But the returns need to be commensurate with the risk involved, and just like CIP, there are many.
A 1 or 2% increase in yield on resi is not even worth my 40cents for the phone call imo.
At 3% I'll think about calling and try figure out how much they gonna negotiate.
 
This one advertised 8.6% return, which is higher than standard from what little I know. I assume that figure didn't include any body corp costs or management fees. 2BR and 2 Bath so likely over 50sq.

It's all sounding a bit too scary though.
 
2BR and 2 Bath so likely over 50sq.

You'd be amazed at what they call a 2BR - I've seen what would pass as a "studio" (say 40 sqm) partitioned off to create 2 "bedrooms" (no lounge of course), a tiny single element cooktop thing on the bench and a small sink ("kitchen") and a bathroom that's smaller than one on a airliner.

Cheers,

The Y-man
 
agree on this one, after looking at the floor plan.

You'd be amazed at what they call a 2BR - I've seen what would pass as a "studio" (say 40 sqm) partitioned off to create 2 "bedrooms" (no lounge of course), a tiny single element cooktop thing on the bench and a small sink ("kitchen") and a bathroom that's smaller than one on a airliner.

Cheers,

The Y-man
 
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