Buying a Quest Apartment

I am looking at getting higher returns for my SMSF and found Quest which give you a 6.5% return and all out goings paid
It could be suitable for me as I am in pension mode and will not have to pay CGT on selling and the returns are attractive
Has anyone had dealings with Quest Apartments as I would like some feedback from this Forum before I contact Quest,Accountants,etc

SENIOR said:

I am looking at getting higher returns for my SMSF and found Quest which give you a 6.5% return and all out goings paid
It could be suitable for me as I am in pension mode and will not have to pay CGT on selling and the returns are attractive
Has anyone had dealings with Quest Apartments as I would like some feedback from this Forum before I contact Quest,Accountants,etc

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are u going to buy with cash, or need a loan ?

6.5 nett sounds nice ........but


ta
rolf

I will be paying it out of my SMSF and paying cash
I have all my money in a term deposit earning 5% which matures 21 Jan 2013
I was happy getting my 6% but those days are over so looking at safe investment

Not sure why you'd bother tbh. If you are looking for 6.5%+ yield you might as well buy a commercial property - at least you can sell it when you want to realise the asset.

SENIOR said:

I will be paying it out of my SMSF and paying cash
I have all my money in a term deposit earning 5% which matures 21 Jan 2013
I was happy getting my 6% but those days are over so looking at safe investment

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Hi Senior

Id class a serviced apptment as capital stable, rather than safe in the real sense.

Having said that, if you do go down that track Quest has been around for a long time, and I do like their product as a casual user 3 to 5 times a year.

ta
rolf

Not sure why you'd bother tbh. If you are looking for 6.5%+ yield you might as well buy a commercial property - at least you can sell it when you want to realise the asset.

Thats true and I have considered commercial as the returns are much higher than residential. I have been investing in IPS for 15 years and should have gone into commercial as well. I just havent had the exposure to buying commercial property as the returns can be high but that comes with higher risk. And my risk profile now is low for obvious reasons

SENIOR said:

I am looking at getting higher returns for my SMSF and found Quest which give you a 6.5% return and all out goings paid
It could be suitable for me as I am in pension mode and will not have to pay CGT on selling and the returns are attractive
Has anyone had dealings with Quest Apartments as I would like some feedback from this Forum before I contact Quest,Accountants,etc

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you won't have to pay capital gains tax anyway becuase it won't go up in value

buy something else, anything else

SENIOR said:

I am looking at getting higher returns for my SMSF and found Quest which give you a 6.5% return and all out goings paid
It could be suitable for me as I am in pension mode and will not have to pay CGT on selling and the returns are attractive
Has anyone had dealings with Quest Apartments as I would like some feedback from this Forum before I contact Quest,Accountants,etc

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Most serviced apartments have little growth over the term that you hold them and are generally harder to sell when you want to as you have to sell to another invester - who unless they have hefty deposit (40%+) will find it hard to finance.

Hi Senior

These type of investments have been discussed a number of times here and well worth the read

Quest Apartment Query

QUEST apartments

Quest Apartments Inner city investments

Serviced Apartments

What's your view on apartments?

I need help with my recent apartment purchase!

Risks in purchasing hotel apmnts on 10-year lease

And may more i.e. Google/Search Quest or Serviced Apartments

In short though, there would seem to be more con's than pro's for many with regards to finance, management rights, land component, capital growth potential, risk, rental guarantees and resale potential

Thanks for all the feedback and didnt want to contact Quest as they would just give me spin so I wanted to use this forum
I certainly wont be going any further and I will look at something else that can give me cashflow

SENIOR said:

Thats true and I have considered commercial as the returns are much higher than residential. I have been investing in IPS for 15 years and should have gone into commercial as well. I just havent had the exposure to buying commercial property as the returns can be high but that comes with higher risk. And my risk profile now is low for obvious reasons

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Hi Senior

On this point, my response would be that you can buy whatever risk profile you want in the commercial market. For example, for around 8% net (and enough cash) you can probably buy a Centrelink office secured by the Federal govt with up to 10 years lease tenure on it. I've seen medical centres leased for 10 years to high quality listed medical companies going for over 8% net as well. It's hard for me to think of a property investment anywhere that is lower in risk.

Of course these investments can often have other less desirable features, such as no market rent reviews for 10 years (or longer with options - and hence no upside in that time), so the yields are good because growth investors looking for quick equity gains will pass them over. But if all you're after is good cashflow and security then you should be able to find just that in the right corner of the CIP market.

It's when people want the triumvurate (don't we all?) of good cashflow, good security and good growth upside with downside protection (ratchet clauses etc) that it gets a bit more tricky. Usually something has to give but certainly not always - the action is all in finding those exceptions - and making better risk assessments than the next guy through knowing what is important to you at the end of the day.

Plenty of properties with good upside and excellent security (10 years plus to excellent companies) go for lower yields (circa 7%).
Plenty of properties with poor to no upside and excellent security (10 years plus to excellent companies) go for higher yields (circa 9-10%).
Plenty of properties with excellent upside and poor security (1 year lease to dodgy bros) go for even higher yields (10%+).

And then there's a whole swag of properties that sell on really low yields with bad leases to poor companies just because of land value or some other factor (someone really wanted it). I tend to pass over these pretty quickly - there is also a lot of junk out there! But the searching is fun for some of us...

Thanks Hi Equity
My daughter does the bookeeping for a person who has about 20 commercials
mostly warehouses and factories
I will tee up a meeting with him and he may be able to point me in the right direction

Hi senior,
We bought a quest apartment in Darwin in 2005, and has been a very good investment, always cf+, low maintenance investment, that has benefited from the growth up in Darwin.
I sometimes reflect that if I had bought a house up in Darwin instead, at the time, I would have done better, but having 3 properties in the city I live, they keep me busy enough, so I enjoy the passive nature that the quest apartment is. The rent is always in the bank, and worst case scenario, if the quest business up there were to fold( which I seriously doubt as when I was up there even in off season, they were fully booked out) I would get a very similar rent as a standard unit investment.
I couldn't get a loan at the time from CBA more than 50% lvr, who had all my other loans, but St George were happy to give me 70% lvr, and a 0.7% discount off the standard variable rate also.
It isn't good to have all your loans with the one lender anyway.

Hi frini
I had another look today at Quest and checked all the ones for sale
I am comparing this with buying commercial property which this forum have also recommended
So its early days but I am finding the process interesting

For your perusal also..

Serviced apartments to outperform hotels in next three years

The serviced apartments sector is forecast to outperform the hotel sector over the next three years, according to the latest Serviced Apartments Review by Atchison Consultants.

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Paul Constantinou, chairman of Quest Serviced Apartments, which has the largest share of a very fragmented market (6%), says investors collectively own more than 5,000 individual Quest apartments.

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Investing with Quest. Your questions answered.

Investing in property is a big decision, so we’re sure you might have a few questions. Our most common queries are listed in the table below, but if there’s something that still needs answering please get in touch and one of our experienced representatives will call you back at a time that’s convenient for you.