Quest Apartment Query

F

Frankie

HI All,

I am a newbie to this forum and I am going to have a settlement for my first property (off the plan property). I came across the offer from Quest service apartment and I am quite interested to purchase the one in Maitland, NSW. This looks like a promising investment with purchase price from $250,000 and rental yield of 6.5%. There is no management fees, letting fees, body corporate fees, etc. There is also a rental guarantee regardless of the occupancy.

I do not have experience in investing on this type of property, so I would like to know if any of you know what would be the drawback in purchasing this property. For example: difficult to obtain finance from the bank, no one would buy the property when you want to sell it later, or other reasons. This seems to be a good property but I am just being suspicious since I am not familiar with this.

Thank you.

Frankie
 
Welcome!
Id walk on past a serviced apartment unless you had done some serious due diligence. They are a totally diferent animal than normal residential property.

the reasons you list are true, it is harder to finance, and due to it being harder to finance, there will most likely be less potential buyers (and therefore lower prices) when you want to sell.
Further be sus on rental guarantees, and due your homework on the financial viability of Quest as well as the vendor of the property (they may not be one and the same).

Avoid.
 
@tobe: Thank you for the warm welcome. I think I have to be very careful with this type of investment and probably I will avoid this too. I will look for other opportunities.

@Fifth: thank you for the info. I think will be very wary about purchasing service apartments.

Regards,

Frankie
 
A client wanted to purchase a Qwest appartment in Melbourne a few years ago. I advised him against it but he proceeded on the basis of good cashflow and so on.

Not an easy deal to finance (and if the banks don't like them, you've got to wonder if they know something that you don't), but we did get the finance through.

3 years later, the client is in touch saying he needs to restructure a couple of loans, and BTW, he's selling the Qwest appartment. Whilst the income looks good in theory, there is occassionally vacancies and the management fees and other ongoing costs are much higher than he anticipated. The cashflow hasn't been what it should have.

He doesn't expect to sell for a profit either.
 
Frankie said:
There is no management fees, letting fees, body corporate fees, etc. There is also a rental guarantee regardless of the occupancy.
Click to expand...
This is not an investment, don't do it.
Spend your money on an equivalent 1 bed unit in a well located older block that needs a reno.
 
@angel: I only tempted by the rental return that it gives. However, I have my doubt whether it is easy to obtain mortgage from this type of property and the future selling price too. It is good to ask opinions from this forum before jumping into the property.
 
do most serviced apartments come with no management fees + guanrateed rental regardless of occupancy?

the last time I checked out a few serviced apartments for a friend, none seemed to have either
 
Truly Exotic said:
do most serviced apartments come with no management fees + guanrateed rental regardless of occupancy?

the last time I checked out a few serviced apartments for a friend, none seemed to have either
Click to expand...

You've got to ask yourself how the management company makes money. If they're not charging you management fees, then they're either a charity, or there's something you're not being told.

The most common scenario with rental guarantees, is that they're paying you the guaranteed amount and pocketing anything more, or they're paying you the guaranteed amount and taking a larger profit margin on the sale of the property. Most people find that after the guarantee expires, the rent drops dramatically.
 
Frankie said:
HI All,

I am a newbie to this forum and I am going to have a settlement for my first property.

Frankie
Click to expand...

Hello Frankie, it is good that you have not bought this and you are just asking questions. When you said you are going to have settlement, I understood that you had already bought and settlement is going to happen soon.
 
Hi angel,

My apologies for the confusion. What I mean is I am going to have a settlement with my other property which is 1 bedroom unit at Wentworth Point, Sydney.

I am only asking questions about the Quest apartment because I happened to see the offer from their website.

Thank you for the advice, everyone.
 
PT_Bear said:
You've got to ask yourself how the management company makes money. If they're not charging you management fees, then they're either a charity, or there's something you're not being told.

The most common scenario with rental guarantees, is that they're paying you the guaranteed amount and pocketing anything more, or they're paying you the guaranteed amount and taking a larger profit margin on the sale of the property. Most people find that after the guarantee expires, the rent drops dramatically.
Click to expand...

agree, I didnt delve that far into it, as I was curious myself, but warned my friend not to pursue, I assumed, it was owned by a company such as Quest/Uni Lodge where they would rent it out at $120 per night 4 days per week on average of the year, and pocket the difference, hence no management fee
 
PT_Bear said:
A client wanted to purchase a Qwest appartment in Melbourne a few years ago. I advised him against it but he proceeded on the basis of good cashflow and so on.

Not an easy deal to finance (and if the banks don't like them, you've got to wonder if they know something that you don't), but we did get the finance through.

3 years later, the client is in touch saying he needs to restructure a couple of loans, and BTW, he's selling the Qwest appartment. Whilst the income looks good in theory, there is occassionally vacancies and the management fees and other ongoing costs are much higher than he anticipated. The cashflow hasn't been what it should have.

He doesn't expect to sell for a profit either.
Click to expand...

Here is your answer. You have no control.

Dont do it. Peter
 
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