• Investing in Serviced Apartments in Vietnam: Foreign Buyer’s Guide

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    Serviced apartments are popular among foreigners and Vietnamese who want a more premium experience while living in Vietnam.

    It’s a luxury that most people cannot afford in their home countries. Also, the local housing standards are often below foreigners’ criteria, a reason why renting a serviced apartment is the only option.

    In this article, I explain what serviced apartments are, what the benefits are of owning one, how you can rent out your serviced apartment, and about prices.

    What is a serviced apartment?

    Serviced apartments can be found in both newly built local houses (typically 3-5 floors) and high-rise condominium buildings. Besides, some operators offer serviced apartments similar to hotel units, used for tenants that plan to stay for just a few days or sometimes for years.

    Renting a serviced apartment compared to local ditto is generally more expensive, but also convenient, as the units come with the following:

    • Furniture (beds, couch, closets, tables, chairs, paintings, and more)
    • Bedding and bed linen (pillows, mattress, and bed sheets)
    • Kitchenware and accessories (oven, microwave, water boiler, pots, pans, plates, glasses, cutlery)
    • TV
    • Pre-installed internet (Wi-Fi)
    • House cleaning (usually 3-5 days a week)
    • Facilities (gym, pool, BBQ area, playground)
    • Parking & security

    Operators of hotel-like serviced apartments even offer free breakfast and room service to tenants.

    Worth mentioning is that the standard of serviced apartments can vary. For example, some landlords or agents might claim that a building has serviced apartments, but don’t take for granted that the facility will have a pool, BBQ area, and playground.

    Potential tenants should confirm that beforehand, preferably by visiting the serviced apartment.

    You should also keep in mind that the electricity fees are comparatively high and it’s common that tenants pay as much as VND 2 – 4 million (USD 80 – 170) per month, depending on the size of the unit.

    If you live in a condominium with shared facilities like a gym and swimming pool, you also have to pay a management fee that is typically around USD 100 a month.

    vietnam-serviced-apartment

    What are the benefits of investing in a serviced apartment?

    One of the clear benefits of investing in serviced apartments is that you can earn high passive rental incomes without the need of being in Vietnam. Nowadays, most foreigners opt-in for serviced apartments to get housekeeping, cleaning services, and readily available apartments.

    Buying new furniture can be a hassle, especially in foreign countries. The demand is high for these units and the persons who decide to rent serviced apartments generally have higher budgets than those who don’t.

    Busy executives sometimes decide to opt-in for hotel-like serviced apartments, including room service, breakfast, cleaning, and washing.

    The rental yields are in the higher spectra and some serviced apartments, such as condotels, often provide lucrative payment schedules and guaranteed rental yields. Sometimes, the yields can stretch up to 10%-15% and last for years.

    Worth mentioning is also that the ongoing maintenance and repair of the serviced apartments are carried out by the operator of the building. Thus, you won’t have to input much time or effort into such an investment.

    Are there any drawbacks?

    Investing in branded serviced apartments that are run by operators also has some flaws, of course. One of the most outspoken is that novice investors often target these products, which results in a lower amount of investors. Sometimes, it can be more difficult to resell serviced apartments.

    Another point worth mentioning is that your income will depend on seasonality. During the COVID-19 crisis, for example, the demand for serviced apartments dropped significantly, resulting in lost income for investors.

    Besides, the performance of these investment vehicles often relies on the operator and the management. You must do due diligence and check whether the operator has a decent track record. A poorly-managed serviced apartment could result in lost income, even during boom days.

    How can I rent out my serviced apartment in Vietnam?

    It depends. Hotel-like serviced apartments are run by operators who are in charge of finding new tenants. But, if you rent out a condominium unit as a serviced apartment, it’s solely up to yourself and/or your agent to find new tenants and who are willing to pay for the higher standards.

    They are typically foreigners, expats, or wealthier Vietnamese professionals.

    Your best option, especially if you live overseas and if the serviced apartment is not run by an operator, is to let an agency help you find the tenants. They can utilize their network and knows how to find suitable and quality tenants in the most efficient ways.

    Keep in mind that the agent will pocket a commission which is usually equal to 1-3 months of the rental value. To get in touch with a real estate agent, you can check this article or fill in our form at the end of this article.

    There are plenty of agents available in cities like Ho Chi Minh, Hanoi, and Da Nang. Many have long experience in catering to foreigners and understand their demands.

    How can I maximize the rent for my serviced apartment?

    If you buy-to-let, you should maximize your rent, and there are simple ways of doing this.

    The layout of an apartment is important and local Vietnamese and foreigners often have a different taste. If you visit serviced apartments in Ho Chi Minh City, you’ll notice that the TVs are placed in front of the bed (often mounted to the wall). Yet, many foreigners prefer to have the TV in front of a couch.

    So if you target foreign tenants (like expats) you should pay attention to the layout before you invest in a unit and start renting it out.

    Besides, the interior is equally important. There are simple ways of buying cost-friendly furniture, and decorations that make the unit look more modern, luxurious, and homelike.

    Below is an example of a unit in Masteri, Ho Chi Minh City. As you can see, the glass tables, carpet, and modern interior make the apartment look way more inviting.

    masteri

    Serviced Apartment Prices in Vietnam

    Generally speaking, foreigners cannot buy serviced apartments in local buildings, there must be units in commercial condominium projects or condotels. That said, these buildings have great facilities like swimming pools, gym, supermarkets, and more, making them more attractive to both foreigners and wealthy Vietnamese.

    Serviced apartments are more expensive than regular apartment units, due to the higher standard and services. Somerset, which is one of the biggest serviced apartment providers usually sells units in the hundreds of thousands of US dollars.

    That said, the rents are comparably high and range from USD 2,400 – 3,600. 2-bedroom units can be rented out for as much as USD 3,500. If you want to read about our favorite serviced apartment operators in Ho Chi Minh, you can check this article.

    Condominiums, on the other hand, are less pricey, but still offer decent rental incomes, sometimes stretching up to double digits. You can easily find units that cost around USD 150,000 – 200,000 and where you earn USD 1,000 a month.

    That equals a gross rental yield of 6% – 8%.

    Just remember to include the management fees and other related costs when calculating your potential yields.

    Want to read about interesting serviced apartments in Hanoi? Check out the following article: Serviced Apartments in Hanoi

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