Resort Investment

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From: Jim Koss


Some previous messages in Forum have had bad experiences with resort type investments in Gold coast and other QLD areas.

Has anyone out there had any positive experiences or stories with this type of investment as I am considering 1 such investment in a Victorian coastal town ??
 
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Reply: 1
From: J Parker


Jim, I haven't had any experience in buying resort places but, after all I've heard and read, I would be very wary. I believe that due diligence is really important here, as you can be misled on the figures given to you by the vendors/agents.
If I were you, I would be getting (on paper) every costing that you would be up for- strata type fees, cleaning services, rates etc first and a true rental return rate. By that I mean the vacancy rate expected on the unit- you must factor that in with these resorts as they are not rented out for the entire year, usually only during holidays and hot seasons.
Don't go off what the brochures say, as they can be very misleading. For example, one I read was quoting a rent rate of $150 a night. However, most people on holidays would rent for a week or two, thus reducing the rent down ($650 per wk), not to mention your return!! Not many people rent from these resorts for one or two nights in holiday time.
The other issue, I believe, has something to do with the amount of control you have over the property. Related to the body corporate..? Maybe someone else can help you out there.
Good luck and make sure you are fully aware of all costings etc.
Cheers, Jacque :)
 
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Reply: 2
From: Rolf Latham


Hi Jim

From a financing point of view they can be harder to get favourable loans for.

Ta

Rolf
 
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Reply: 1.1
From: Jim Koss


Thanks for your reply Jacque,
I agree with all you have said and will look deeper into the facts and figures !
 
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Reply: 2.1
From: Jim Koss


You are correct Rolf,
after a quick conversation with a bank manager I know, he claimed that banks don't look at these investments favorably.
They will only lend 70% of the value and consider 70% of the proposed income as genuine income.
 
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Reply: 2.1.1
From: Property Investor


Jim,

Sounds like you are looking at the same property that I am.
Look the price is cheap the demand is huge during the holiday season. This can vary from 8 weeks to 12 weeks in the year when your return can be great. However there is not much happening the rest of the year except, Easter and Grand Prix as an example.
You need to look at all the outgoing fee's, body corporate, rates, etc.
And remember if already furnished there will be cleaning costs, vacuuming carpets, etc, which are regularly done.
Most of these units are also usually around the 5 square mark in size which from experience lenders will not even want to look at or will limit your borrowings.

I hope this help,
I'm still looking in the area due to the huge potential in capital growth.

Regards,
Mannie.
 
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Reply: 2.1.1.1
From: The Wife


so its a motel room type of Investment?

Does it have onsite property managers?

Do the property managers own the leasing rites?

If the property managers go bust, will they place a caveat over the place until something is sorted out, preventing the leasing rites being re-sold, and also preventing the place being tenanted?

Do you have a cost schedule of repairs cleaning and replacement of items in this fully furnished place? Did you know that motel type places will throw away a pillow case with a stain on it, and replace it with a brand new one, and charge the cost to the owner of the investment, did you know that some places charge you $23 upwards for this?

Not sure if this is the kind of thing you are looking at, if it is, get prices for everything.

Also what is the system for renting, do the property managers have apartments there as well? you can bet theirs will always be full.

Good Luck

TW
~Life is a daring adventure, or nothing at all~
 
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