Freehold serviced apartments

Hey does anyone own or have knowledge of running serviced apartments? As in where you own the building & run it as a business. Not just leasing an apartment then putting it on airbnb.
The few I know about have government / industry Tennants, often booked months at a time.
Pay a cleaner & caretaker, then run the bookings 100% themselves.

Any imput welcome.

 

Hi @Mark@Inverell - I have some past clients who do variations of this via buying caravan parks, hotels and other ST options then either self managing or appointing a manager (depending on location and scale) - If you have a very specific idea about how you want the apartments to be titled or built you might be better off buying a site and developing it out yourself? If not... pooly run old motels that need a cosmetic renovation offer some good upside in cashflow and eventually capital resale once you have a few years of better occupancy.

City versions with larger apartments obviously amazing but the buy in cost would be really big in most cases. I see the small/medium motels fairly often off market, many need a facelift and I'm sure there is profit in it for the right person with some vision. The stuff I come across in coastal and southern regional nsw seems to often be in the $2m to $5m space but a good Sydney based block of serviced apartments would need to add a zero to that in most cases.

 

There is a company that runs serviced apartments in Coogee in Sydney
They are called Australian Executive Apartments

 

Thanks. I've looked at two in regional areas. Both up and running and both 9 apartments freehold, with good systems in place to manage yourself. Cleaner and caretaker on the books.

Both have high occupancy rates catering mainly to health, education, research scientists and gas companies. One seemed purpose built, Northern Rivers NSW, catering to local hospital professionals, the other a block of double brick flats converted and built like a tank. It was booked 100% to end of 2022. A mixture of agriculture, Inland railway / Newell Highway freight, gas and government service industries being the local economic drivers for that one. Cash flow was excellent for both, being regional areas but Cap gains probably inflation no more.

Both in the 2-3 Million range. They would be good guidance for starting your own from an old motel as you mentioned.

 

@Mark@Inverell yep they sound good. What I have seen along the coast over the years is versions of that, either old flock of bats (block of flats) converted to short and medium term or a motel where the owner gets sick of rude tourists and gradually sets up medium to long term contracts for workers to stay in the rooms.

Both work fine as long as you realise it is a bit more work than a standard residential lease. If work is a four letter word then you can even convince a local property manager to run it and organise the cleaners etc if you don't want to be hands on and are wiling to pay slightly above their normal management rates.

It also works with small van parks which I have had clients do before because you can have a the van leases (passive annual income and van owners maintain their own vans) plus some cabins let on contracts to workers plus just keep the best cabins or sites being more airbnb or tourism (if you have a section of the park with better waterfront or beach access etc)