Why it’s a good time to invest in Quest Apartments using an SMSF
If there’s ever been a good time to invest in serviced apartments, it’s now. The corporate travel market in Australia is growing rapidly and the growth is predicted to accelerate. People are increasingly travelling interstate for both business and leisure, and they’re seeking long-term, cost effective accommodation options.
This narrative might sound anecdotal but some online research backs the story up. A quick use of Google Trends – a free tool that allows searches over time to be graphed and viewed – shows that searches like ‘buying serviced apartments’ are rising in popularity after first appearing in the mid-2000s. And most Australians will have noticed serviced-apartment buildings springing-up around major cities and towns to meet rising demand.
Why invest in serviced apartments?
Serviced apartments are subject to risk, like any form of investment, but they’re also an investment option with great potential and opportunity. There are many benefits of investing in serviced apartments over traditional property investment. The key benefits include:
- Long term leases rather than short term with multiple tenants
- Fixed annual rental increases at 4% or CPI
- Strong occupancy rates
- Low to no management fees and letting fees
- No advertising costs
- Daily property inspections
- Repair and maintenance costs and building insurance are usually handled by the tenant, not the landlord
Key Benefit: Self-Managed Super Funds (SMSFs)
In addition to the broad benefits, there are more specific gains from serviced apartment investments that involve self-managed super funds (SMSFs).
A self-managed superannuation fund (SMSF) - or DIY super fund - is a superannuation fund that’s managed entirely by the account holder, in contrast to an institutionally administered fund. This personally-tailored type of superannuation fund is becoming increasingly popular and searched-for as the terms and conditions allow an investor to take a proactive role in investments and potentially reap higher returns from wise investments.
- Direct control over superannuation, income and investments
- Potential cost savings
- Flexibility with finances
- Significant tax benefits
So what’s the link with serviced apartments? SMSFs are relevant to a serviced apartment investment because property investments can be made and held in a superannuation account, with the rental income returning to the fund. And serviced apartments are a perfect investment option because of the secure rental returns and associated tax benefits.
There are other practical reasons why serviced apartments are a worthwhile as a superannuation investment option too: Government legislation dictates that property held within a super fund must be kept at ‘arm’s length’, meaning the an investment property can’t actually be lived in, so the secure occupancy rates of serviced apartments are perfect for SMSF investors looking for property that generates a consistent income.
What brands are worth investing with?
Several companies are active in the market but Quest is one of the longest-standing and most -trusted Australian brands in the sector - established at a time when accommodation options were limited to traditional hotels and motels, with the lack of a real home’s comfort and convenience.
Quest has enjoyed steady growth over the past few years, and this success can be attributed to its franchisee model, investment opportunities, and ongoing training and support for its investors. The company is also Australasia’s largest serviced apartment network, with more than 140 properties across Australia, New Zealand and Fiji - with businesses in central business districts, suburban and regional areas
The Australian company looks certain to continue leading the long-term serviced apartment market and is a wise choice for anyone looking to invest in serviced apartment, alone or as part of an SMSF investment.
You can take a look at their portfolio of properties at www.questproperties.com.au
The above information is supplied by Quest Properties.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Mortgage.
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