While serviced apartment investments won’t be for everyone (is any investment ‘one size fits all’?), there is much more to serviced apartments that make them an attractive option for many investors, especially those looking for a ‘buy-and-hold’ strategy.
In the same way you’d investigate a company before buying its shares, or compare fund managers before investing, potential investors should review which companies are performing best in the serviced apartment sector. Quest Properties is the market leader in Australia, and since it began operating in 1988, has grown to more than 150 properties around Australia, New Zealand and Fiji. In addition, Quest has struck a partnership with the Singapore-based Asc0t group, opening the doors to allow Quest to become an international brand.
Quest has found success with a strategy based on meeting the needs of corporate travellers. Close corporate relationships in the business world help inform Quest of developments in how people travel for business, impacting decision-making around future Quest property locations. This strategy means Quest avoids the usual fluctuations in the property market as the objective isn’t to invest based merely on capital growth.
New locations are carefully assessed based on a strict criteria, taking in the economic strength of the area; the amount of public and private sector investment in local infrastructure, industry and commerce; growing corporate and business activity and improvements in local demographics. This strategy has seen Quest grow to boast a 25% market share in Australia.
Quest also focuses on engaging experienced operators to manage each of its locations. The Quest Group operates as a franchise system, meaning most Quest property is owner/operated. This means the property manager has a vested business interest to manage the property well, a much better scenario for looking after your investment than a typical tenant-landlord arrangement.
This relationship is one of the main advantages of investing in serviced apartments: when you purchase a Quest apartment, you enter into a long-term lease with the Quest operator, who then sublets the apartment for short-term stays, like a hotel. This means the investor can enjoy a regular rental income, as agreed, without loss of income due to vacancy, ticking the cash flow box.
In this arrangement too, the tenant is responsible for many typical landlord outgoings, such as repairs and maintenance, building insurance and non-capital body corporate fees. Management fees, vacancies and advertising and letting costs are also a non-issue for the investor, with these costs absorbed by the operator in its business of renting out the apartment. Once again, this is a plus for the investor - no surprise outgoings that eat into cash flow.
Like any property, major works are sometimes required: any works that do need to happen are communicated well in advance, allowing everyone to plan expenditure.
The last bugbear is resale, with the criticism being that reselling a serviced apartment isn’t as simple as selling a regular residential property. This is only partially true: if you choose to sell your investment, you’d be selling to another investor but that is an ever growing market as investors seek more stable returns than those provided by shares and a higher yield than offered by bank deposits. Should you ever need to sell, Quest is able to support you and provide access to their data base of potential purchasers with the expertise to facilitate a smooth sale process.
There are over 5,000 strata titled apartments owned by private investors who enjoy exceptional returns and enviable cash-flow benefits. Quest Properties offers affordable property investing options with high rental returns (commonly around 6.5% plus) and attractive tax deductions. A Quest property is a secure, high yielding investment with extra benefits like no property or letting fees.
Whether you’re looking to invest, exploring the various benefits or would like an update on all our property news, simply register your interest and we’ll tell you everything you need to know. http://www.questproperties.com.au/register-interest-quest-properties
Do you have more than $120k in your super fund? You could use your super to buy property - Find out how