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hey,
i’m 21 and just starting to get into property investing. i’ve been reading frantically trying to learn as much as i can. on top of this, i’ve made my first investment, hoping to gain as much experience and knowledge as possible.
so my question is: what is involved in serviced apartments (costs and responsibilities) and what do other investors generally think about them? thanks very much for commenting back if you do.
Nick,You watch how quick people come on here and bag serviced apartments. But i take an entirley different opinion.
They are cheap, low maintanance in most cases and generally easy to find CF++++++
The down side is limited capital growth and if the leasee or mgmnt of the building goes belly up or moves out there are so many parties involved that reaching a quick and economically sound outcome can be difficult as many people get caught up in the emotions of revenge and anger.
The other downside is its hard to find financers that like them with a reasonable LVR. Thus they chew up your equity.
So its a trade off between equity and cash flow. My limited experience leads me to believe its easier to find one serviced apartment in a cap city that is as cf++ as 2 or 3 houses or units in dodgey little low pop towns that are less likely to experience cap growth due to low average wage levels.
Remember serviced apartments are subject to economic cyles so when its hot they will have high returns and when its not they will be low. Far more so than houses. At the moment the serviced apartment market returns are about as hot as it gets after years of economic prosperity. 2001 they took a big hit with sep 11 and then SARS. But youd have to think we are close to 12 oclock or so on the serviced aprtment clock.
I love them but im going in to them patiently as they will be more likely to have lower relative returns than higher in the short term.
As far as the equity. Dual keys are now the rage as the title is over 50m2 so that banks will lend on them. But most of these are pretty new and thus still high priced. They will start becoming avail via as original owners start selling them in the near future.
In the meantime aim for ones that are >40m2 or 50m2 to gain easier and cheaper finance.
If + cF is your aim then apartments can be a good option. If CG is the aim then they are no good.[smiling]
