Investing in a serviced apartment with a lease about to expire

Hi All,

I am looking at investing in a serviced apartment in the Sydney CBD. The property is a one bedroom apartment with guaranteed rent of 22k per year. The apartment is rented to the Mantra group for the next 3 years, in which time the lease expires (there are no options to extend) and after this you are free to do what you like with the property. The property is reasonably priced and in a good location (near QVB) and the actual unit is quite nice. There are no management fees during the lease and Mantra pays all outgoings including strata. The strata levies are very reasonable at ~$560/qtr and it looks reasonably well maintained. I am in no rush to live in the property as I am still living at home and will use it as an investment to help pay down the mortgage so the lease period works for me. The only thing I am yet to sort out is if the bank will lend on this property which I should know in the next few days if they will pre-approve me.

I have heard many bad things about investing in serviced apartments and am willing to listen to the feedback. On paper this looks like a good opportunity (reasonable price, good location etc), is there something I am missing? I would like to know your thoughts on this opportunity. The things I am most concerned about is low captial growth in the City and most importantly what will happen after the lease is over. Has anyone been in a similar situation and could provide some insight?

• This topic was modified 10 years, 6 months ago by  antlar. Reason: change title