Renting out Brisbane CBD Apartment to the property manager?

[mja]

Hi all,

I figured I need to run this past a couple of people and get some opinions of some individuals.

My wife and I are building a house that'll become our PPOR. We're currently living in Brisbane CBD in a two bed, two bath apartment that we want to rent out after we move.

Now, the building I'm in currently has about 65% owners and the rest are short term stay accommodation. There is an onsite building manager to basically runs the short term stays as a hotel. He also lives onsite.

He suggested that I rent my unit out to him for $400/week with no management fees, letting fees etc, and he'll basically be the tenant. What he's going to do is furnish the place and put the unit into the short term accommodation pool, so basically a sublet.

He said that he'd be happy to do a lease of 2 years!!

Any hints or tips from those wiser than me? I was thinking of only doing 1 year leases as I could then renegotiate the rent just in case (read: when) interest rates go up. Again.

Cheers!

-- MJ.

 

[kph]

What would you get if you furnished it and put it into the pool of short stay apartments?
ie...how much per night x average occupancy over one year ?

That is effectively what he stands to make over and above the $400 pw he is paying you.
Of course he also has the cost of the furniture as you are not supplying it.

I guess if he controls the short stay side, he could potentially make sure he has yours fully occupied in lieu of any other apartment, so that may be his agenda.

In the end, if its no hassle for you and $400 pw is a reasonable return on your investment, then it may be worth considering.

Beware that the wear and tear will be much higher, and maybe so will the maintenance costs ?
Maybe get him to agree to also handle any maintenance issue at his expense, so its a true 'no hassle' low expense deal for you ?

kp

 

[mja]

Hi kp,

I'd have to start with a $15k furniture package to be able to add it to the short term loan pool myself.

I'll see if I can find the figures that the property manager emailed all the lot owners months ago... as he some furniture package deals to hopefully get more stock from existing rentals. From memory, a standard apartment like ours would bring in about $40k, but then there's 30% commission, cleaning, and all the other piddly costs associated with it, so my guess it'll be about 3-5k more per annum of income than if I rent it out privately.

But then with short term accomm., there are no guarantees.

400pw is a pretty reasonable return. It's then basically cash flow neutral. Yay!

I'll see if I can get the property manager to also look after maintenance.

Cheers!

-- MJ.

What would you get if you furnished it and put it into the pool of short stay apartments?
ie...how much per night x average occupancy over one year ?

That is effectively what he stands to make over and above the $400 pw he is paying you.
Of course he also has the cost of the furniture as you are not supplying it.

I guess if he controls the short stay side, he could potentially make sure he has yours fully occupied in lieu of any other apartment, so that may be his agenda.

In the end, if its no hassle for you and $400 pw is a reasonable return on your investment, then it may be worth considering.

Beware that the wear and tear will be much higher, and maybe so will the maintenance costs ?
Maybe get him to agree to also handle any maintenance issue at his expense, so its a true 'no hassle' low expense deal for you ?

kp