Serviced Apartments

[new_here]

Hi,

I'm now to all this property investment stuff so bear with me here. I have been having a look at a couple of apartments that are leased to serviced apartment operators and from the headline number provided they seem to be a pretty good investment (longish term lease (2+ years), decent rental).

Unfortunately (or should it be fortunately) I can hear my mother telling me that if something seems too good to be true, it most probably is. Being new to this stuff, I assume that I am missing some important considerations.

I assume that given I don't have a significant deposit I can really only afford an Apartment.

What questions should I be asking the agent and what considerations should I be thinking about?

Thanks in advance.

[Bob Kane]

Can you name these serviced apartments and what are the figures (cost, rent pw, expenses (body corp, rates, fees) etc)?
We may have already looked at them and might be able to tell you a thing or two.

[eri]

in the old days someone would take a punt, put up some money and build a hotel

there was always a risk that money would be lost if occupancy rates were lower than expected

however nowadays the smart hotel developer farms this risk out to REI wannabes who would like to dabble but don't have the time or skills

so that's it

if all goes to plan you'll get a little more than a bank deposit and possible capital gains to boot

if it all turns to custard you are the 1 left with the mortgage as they walk away and build another hotel next door

basically your call

how lucky do you feel?

are you willing to bet your house on it?

waldorf seem to be building a lot of hotels in auckland

http://www.waldorf-tetra.co.nz/property_management.htm

seem to have been a truck load of sales at tetra

from $114k - $190k

sales at bankside too

[Dung]

Hi,

I am new here too. Can someone share their experiences investing in serviced apartments. I heard mixed experiences so far.

In summary, I have heard of people never to invest in serviced apartments. However, I have also heard of long term real estate investors who focus on serviced apartments and have done well over the years.

Rgds
Dung

[AMR]

I took a look at Heritage Farmers Hotel a while back and the agent was telling me how great the guaranteed income of $680 per month was.

Trouble was market rent was $300-odd a week!

[One]

Has it got a couple of years of guaranteed rent? If so, get independent (!) advice about what the rent and occupancy rate will be after the guarantee period. Some developers inflate the sales price to pay the guaranteed rent and the market rent is way less, so you end up with an investment that's paying way less than you expected and worth way less than you paid.

You might be better with just an ordinary old unserviced apartment.

[speights boy]

This thread may answer some of your questions.

http://www.propertytalk.com/forum/showthread.php?t=25878

[speights boy]

Are you actually looking at true serviced apartments, with short, medium and long term leases. Sometimes to large corporates?

Or are you looking at buying a hotel room?

The link is from today re the Westin Hotel

http://www.nbr.co.nz/article/investors-revolt-westin-rooms-shut-129265

[Dung]

Hi,

Tks for all your inputs.

I was just comparing between serviced apartments and residential apartments because although I do see many were against investing in serviced apartments. They were case studies of investors getting good returns by investing in serviced apartments managed by established operators.

What about those residential apartment with guaranteed returns? Does that means they are serviced apartments?

Rgds
Dung

[BlueSky]

Apart from the guaranteed income, is there good capital gains on these types of properties?

http://www.landlords.co.nz/property/queenstown-investment-opportunity-guaranteed-rent-for-15-30-years-1440

[eri]

^

maybe

but i'd tend to think

as far as capital gains in queenstown

the easy money's already been made

you have to decide if it will continue

some people seriously burnt in taupo over the last few years

[BlueSky]

Thanks Eri,

If you were me would you buy a property with land with 2-4 % yield and potential capital gains or apartments with 6-7 % yield with little capital gains.

Budget 500-700K

[aay]

Thanks Eri,

If you were me would you buy a property with land with 2-4 % yield and potential capital gains or apartments with 6-7 % yield with little capital gains.

Budget 500-700K

I was actually looking at those queenstown apartments the other day, 6% net yield, had a good think and decided not to proceed. Land will always be a safer bet in my opinion.

[eri]

i prefer apartments because buying a freehold apartment and handing it over to a property manager is pretty easy to understand + control

people said they had no capital gain

but actually apartments bought well 2008 - 2012 are up around 100% in 2015

...true for just about anything in auckland

because there are so many variables and so many pitfalls

i can only advise to start small with something easy; to get in, get out, understand + control

it will become apparent from that

what you should do next

[aay]

with the 2008 GFC, did apartments drop in price more than houses in Auckland in general? Houses dropped ~10% as far as I know, possibly slightly higher in south auckland areas.