Holiday units - Good or Bad?

I am considering buying a holiday unit in Caloundra for personal use and holiday letting. Does anyone have any experience in such, and could anyone offer some advice on what to look out for, pros, cons etc. ?
 
I am considering buying a holiday unit in Caloundra for personal use and holiday letting. Does anyone have any experience in such, and could anyone offer some advice on what to look out for, pros, cons etc. ?

Pro's :

Usually good cashflow.

cons:

Low cg high body corp

Low cg is normal for these types of properties,
there have been exceptions to the rule.

Banks don't like lending under 50sqm.

Try and get at least 2yrs of income produced from the property.
 
Just to add one more con: The time you want to use it is usually peak holiday period when you are getting the highest rent out of tenants - so you don't. :(

Generally bad idea.
 
i wouldn't do it ... high maintenance (have to clean at every holiday let turnover), susceptiable to market downturns in both letting and selling, inconsistant income, high management fees, crime due to long vacant periods.

my inlaws live in a holiday destination where there are lots of holiday lettings - packed for around 10 weeks of the year, dead the rest of the time. the area was first hit in the 2003/4 downturn and is not making any noises about recovery even now.

there are better investments to be had where you can make money and spend it one travelling to different locales of choice - and do you always want to be tied to one holiday destination?
 
The problem with these is that you have no control. Also if you have a bad manager that can be a problem. Watch for the manager whose brother is the maintenance guy, carpet cleaner, window cleaner etc etc all at very nice prices, that you pay!
 
In my experience of owning a holiday unit, PM can not screen the tenants properly. Some nasty tenants stole a wok and soap holder, and will not own damaging the sofa bed. Because PM did not inspect the property straight away and found out the damage ourselves a week later the PM can not charge the tennant. PM said we have no proof even if no one rented the place after the culprit. The cost to tenants for renting the unit for 2 days was $250, the cost to us to fix the sofa bed was $350 was able to get it down to $250. This made us change to long term lease.
 
Friends of mine have 2 on the gold coast, in the same complex. For them its been a success. They have an income agreement with the management company, which sets out the minimum income for the year the body corp etc, and the time they get to use it, I thinks its 2 weeks. They go up at peak times.
I guess it all depends on the management company and the agreements in place, which of course can change over time.
My friend has a cash flow positive, negatively geared for tax (due to depreciation etc) investment. He was not looking for (and I dont know whether he has) capital gains, but the property is near the beach, and is bigger than 50 sqms and is able to be owner occupied, so theoretically it should be having the same CG as similar non holiday lets in the area?
 
i have a house and it works really well. the tenants have really surprised me - i dont really vet them i just take a $1000 deposit and they have all been stars. way better than the dregs i get in my long term rentals. the rates i achieve are unbelievable ($5k+ a week) for the peak weeks... and this place is abit of a dump. i was originally going to demolish if that gives you a clue. it pulls in enough to make it an ok return across the year. then we have a nice place to use in the vacant periods.
 
Top