What are service charges and how do they affect returns?

The common mistake is to look at a strong gross yield and discover later that service charges reduce net performance much more than expected.
This is especially relevant in towers or amenity-heavy communities.
So when you compare two units, always ask about the approved or expected charge structure and include it in your underwriting from day one.
If you are investing, the slightly lower-rent unit can actually be the better asset if its service charges are lighter and its net income is more stable over time.