Should You be Considering a Serviced Apartment Investment?
Buying an investment property is something a lot people dream of, but for many of those, their concept of an investment property stops short at residential real estate. The question of location and type of property are influenced by what you can afford, and what you want. Are you buying somewhere to rent out and retire to? Are you looking for good capital growth, with a plan to sell in the future? Or do you want something that will give you cash in your pocket now? Will you need to borrow, or do you have a nest egg to spend?
How you answer these questions will depend on your particular circumstances, which will be different for each investor. The answers, however, will soon start to shape your investment strategy and provide insights into what kinds of properties are available that meet your needs.
Trying to find the balance in the changeable residential property market can be a challenge, even for seasoned investors. Finding the right property, at the right price, at the right time can elude many in the highly competitive residential real estate market, creating stress, disappointment and even desperation.
For investors looking for an alternative, serviced apartments could be worth considering. Serviced apartments offer investors a range of benefits such as a long-term lease (usually five years, with options to extend every five years), pre-arranged rental increases (usually 4% per annum) and scheduled market reviews. This can make serviced apartments a reliable investment, with steady automatic increases that make budgeting and forecasting easier.
In addition, serviced apartments are a relatively low-involvement investment. Once purchased, the property is leased to a property management company which operates like a hotel room, earning their income from charging guests a nightly rate for the room. The investor is not involved in any of this, removing the need to vet tenants. Even better, the investor is paid their rent, regardless of whether the room is actually occupied or not. This means no loss of income due to vacancy, something that can seriously jeopardise residential property investments.
Plus, the management company takes care turning the room over for guests – housekeeping and cleaning is managed as part of the agreement giving investors peace of mind that their property is being looked after and monitored.
Of course, the success of the investment also rests on the success of the management company letting out your apartment. The travel accommodation industry is becoming increasingly competitive, offering travellers more choice and flexibility. There are a number of serviced apartment operators in Australia, so it’s worth looking into them and making sure their business model stacks up.
While many serviced apartments target leisure and tourist travellers, Quest Apartment Hotels primarily focus on business and corporate travellers, aligning its property development investment in areas of high business growth. With more than 150 sites across Australia and 30 years’ operating experience, Quest is Australia’s strongest-performing serviced apartment company. If you are interested in investing in a Quest Serviced apartment, contact the team at Quest Properties for more information.