Owning a serviced apartment takes away many of the tenancy problems of owning an investment apartment.
Amongst the advantages are an experienced manager and the higher rents that can be obtained for short-stay accommodation.
What could possibly go wrong, except for the monthly distribution being late?
What could go wrong is that the manager goes broke.
This happened to the owners of the 242 serviced apartments in Ruby Apartments at Surfers Paradise on 1 August 2019, when receivers were appointed to the manager (a receiver is like a mortgagee in possession).
As the court cases which followed demonstrated, the rents were preserved in a trust account. But the receiver and others were allowed to deduct their expenses, meaning that the owners received only 42.27% of the rents, not 80% or more. Fortunately, this situation continued for only 3 months until the management rights were sold.
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