Serviced apartments - a property strategy for SMSF investors?

20 May 2016
20/05/2016 Quest Properties
Self managed super funds are on the rise. In fact, SMSFs are the fastest growing segment of the superannuation sector, with more people choosing to manage their own retirement finances than ever before. The fallout of the GFC stripped many super funds of their worth, forcing people to remain in paid work for longer than they had planned. This is a scenario investors with SMSFs are hoping to avoid.
While a SMSF does give you more control over your finances, it also comes with the additional responsibility of researching, managing and being ultimately accountable for your retirement investments. This can mean a lot of extra work and, for newcomers to the sector, potential stress. The volatility and complexity of the share market means many investors also turn to property to balance their exposure to risk.
What kind of property investor are you?
In order to make a sound investment, it’s vital to know that there is rental demand in the area for the kind of property you are buying. On top of this, there are specific conditions that apply when purchasing a property through a SMSF that need to be considered as part of a property investment strategy.
SMSF property purchase rules
The bricks and mortar tangibility of property has always made it an attractive option for investors, but there are specific rules that apply to SMSF property investment. In addition to solely providing retirement benefits to fund members, your SMSF purchased property can’t be bought from someone you know or has ties to any of the SMSF members. You also can’t live in it yourself, rent it to anyone you know or let anyone you know live in it. While this may not be a problem if you buy outside your area, it could be tricky for those wishing to purchase property within their own home locality. Additionally there is the rigmarole of dealing with agents, tenants and tradesmen. For some, this puts property investment in the too hard basket.
Serviced apartments - a simple solution
However, there are alternatives to traditional residential property investment. Serviced apartments could be a good option for SMSF investors looking for a more hands-off property investment strategy. Serviced apartments are managed for you, so there is no day to day involvement in the ongoing care of the property and all the management and maintenance details are taken care of.
In addition, you are guaranteed your rental payment whether the property is tenanted or not, making your serviced apartment a reliable source of income. In addition, they generally provide a much high net return on your investment than standard residential property and in many cases, the management company pays some of the landlord’s annual outgoings.
Once your SMSF purchases the property, it is leased it back to the managing company on a long-term, commercial style lease, with all fees and charges clearly stated up front. The management company then rents it out as short- to long-term accommodation, operating similarly to a hotel. This means that you know from the outset all costs associated with owning the property and can enjoy ongoing rental payments without worrying whether it is actually tenanted or not. This reliability of income and expenditure means there are no sudden surprises or stress if there are long periods with no-one in the apartment.
Quest Serviced Apartments
For SMSF investors considering a serviced apartment, Quest Properties has over 150 serviced apartment complexes in Australia and New Zealand. Quest’s rigorous due diligence process means they offer only excellent apartments in great locations. Quest manages more than 5,000 apartments owned by private investors, and offers investors long-term security and a reliable income stream, without the hassle and risk involved in traditional property investment.
To find out more about investing in a Quest serviced apartment call Quest Properties on 1800 697 837 or simply click here.
Waiver: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should consider the appropriateness of the information in regards to their circumstances.

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.


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