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Investment Apartments for Gain not Pain

For many people looking to get into the property market, apartments make an attractive option. Indeed, for many, apartments can be their only option. With house prices pushed to unattainable levels in many locations around the country, the apartment blocks rising in cities and suburbs present a viable opportunity to secure a piece of title.

However, the March 2017 RP Data Pain and Gain report revealed that even in Sydney there were units being resold at a loss. In Darwin, just over half of all unit resales were sold at a loss (51.6%), while in Perth the figure is nearly 36%, due to the downturn in mining in these states. Canberra and Brisbane feature in the low-mid-twenties (21.8% and 24.5% respectively), indicating there is a considerable level of risk for investors in these locations.

What this shows is that even though most properties are sold at a profit, for investors, it can be difficult to know whether the property they are buying will offer them the returns they need. If the market is suddenly oversupplied with new apartments, will the demand outstrip supply? Will rents be forced down, as tenants are spoiled for choice? Will the property become unaffordable, as costs remain the same yet income decreases?

For investors, finding the balance can be difficult. A well-priced property in a decent area may seem like a good choice, until suddenly that area is swamped with development and their apartment is just one of hundreds renters can choose from. A good quality, yet older apartment may suffer in the face of brand new units on offer, and investors with long-term tenants may find themselves losing good-quality tenants to more attractive properties.

For investors looking into apartments, there are other options outside the residential property market that can eliminate some of these concerns. Serviced apartments, for example, offer investors a long term lease – usually five years, with options of up to 25 years. The lease is held by a franchisee, who uses the apartment as a hotel room, sub-letting for short stays. This alleviates the concern of loss of income due to vacancy, as the franchisee is obliged to pay rent for the room, regardless of whether it is occupied or not.

Essentially, this means serviced apartments operate in a market quite outside the residential real estate market, and are not subject to the same fluctuations. Serviced apartment property companies use intelligence obtained from business and commercial contacts to evaluate locations based on economic and corporate development, to support the model of providing short-term accommodation for business travellers.

Quest Properties have access to 150 serviced apartment complexes across Australia and New Zealand. Quest also offer investors fixed annual rental increases and five-yearly market rent reviews, making Quest a great choice for investors looking for a more steady, predictable and reliable property investment option.