Serviced Apartments

[Tom84]

Hi All,

I'm looking to invest in a Mantra Serviced Apartment basically I buy the apartment with a 20% deposit down and 80% loan from finance.

It returns about 8.5% net after strata/mantra management costs which will help me with extra cashflow and the options for guananted lease up to 6x 5yrs.

My question is I run a small business and am GST registered do I have to Pay GST on the apartment? Or on the monthly income it brings. Lets say it's $1050 per month from Mantra deduct $50 for the management/cleaning fee's. Do I need to pay 10% of that as GST or charge them a GST component?

Or can I just keep it as a residential/serviced apartment and put it towards my income tax as in the long run I just want to retire purely on investment income with no company or business active.

Cheers

Tom

 

[Rolf Latham]

Hi All,

I'm looking to invest in a Mantra Serviced Apartment basically I buy the apartment with a 20% deposit down and 80% loan from finance.

pls double check with your funder............not many like these props

ta
rolf

 

[Aaron_C]

80% loan on a serviced apartment? Are you sure?

 

[geoffw]

I looked into something similar some years ago. I was quite interested- until I found out that it had had zero capital growth in the preceding five years, where other properties had had strong growth. The small amount of income I would have received was eclipsed by the capital growth foregone. I went elsewhere and did very well.

They were of particular appeal to retirees with cash to invest, as they returned a strong consistent income.

 

[The Y-man]

They were of particular appeal to retirees with cash to invest, as they returned a strong consistent income.

...until the company running the accomodation goes bust and said income goes missing....

The Y-man

 

[Francesco]

Hi All,

I'm looking to invest in a Mantra Serviced Apartment basically I buy the apartment with a 20% deposit down and 80% loan from finance.

It returns about 8.5% net after strata/mantra management costs which will help me with extra cashflow and the options for guananted lease up to 6x 5yrs.

My question is I run a small business and am GST registered do I have to Pay GST on the apartment? Or on the monthly income it brings. Lets say it's $1050 per month from Mantra deduct $50 for the management/cleaning fee's. Do I need to pay 10% of that as GST or charge them a GST component?

Or can I just keep it as a residential/serviced apartment and put it towards my income tax as in the long run I just want to retire purely on investment income with no company or business active.

Cheers

Tom

Look up Mantra and its past treatment and relationship with owners. Some of its setups with owners went very sour. Be very wary of the hype about returns versus its historical track records of getting the projected returns for owners on some of its setups.

 

[Tom84]

I tried to do some research but couldn't find anything sour on Mantra specifically, do you have any links or examples of when things went wrong with owners? I would be very interested in doing my due diligence in this regards but not sure where to look they don't really have a tripadvisor for investors (Well maybe somersoft is that.)

With regards to it been a serviced apartment I'm aware of the Pittfalls but I already have my CG strategy in place with my other properties which are performing very well but need that extra positively geared Cashflow that would be locked in with a large company in a CBD area and with rates so low at the moment it seems even more appealing. Main concern is I am not sure on the GST question, some people I've spoken to said they pay GST on their serviced apartment and others say you don't have too unless you're planing to claim GST credits on purchases. (Which I won't be making purchases because Mantra Group provides all furnishings and it's a tiny management fee only) Is anyone aware of the GST tax implications with SA's?

 

[travelbug]

Have you factored in cleaning costs, vacancy rates etc?

Unless the CF is really great I wouldn't want to forgoe capital growth. Also there are LOTS of them so your sell price is goverened by how desparate other sellers at the time are.

We looked at some in Sydney in 2008 and decided to buy a small 1 bed unit instead. It went up 50% in 2 years while the srrviced appt went nowhere.