I seem to be able to locate quiet a few holiday rentals that meet the 11 sec rule… that is without the depreciation really coming into .
What are the drawbacks in holiday apartments/unit or motel rooms. I think CG would be minimal but what else is there that can be seen as a draw back ?read somewhere (was it on here somewhere?) that the tax office has had a big crackdown on holiday homes. If its not available for the 12 peak weeks of summer you need to apportion your annual expenses back. so unless you want a holiday home purely for investment or off season holidays think twice. If anything makes the inhumane standards of the 11 second rule I would grab it… just confirm that it meets it 52 weeks of the year??
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Personally I would probably not invest in holiday rentals unless it was an extremely good deal. It’s a bit too risky for my liking. If things go bad with the economy and people have a hard time financially, one of the first things people drop is their holidays.
AusProp is right on the tax issue. Another tax issue that is currently before the courts is where people establish a line of credit against their property, for say $200K and then they pay $100K of this toward the mortgage on their PPOR. They allow the interest to capitalise. So they get the benefit of pay less interest on PPOR and also claiming more interest on LOC to offset income. Needless to say the tax office is not going to allow this to occur.
One other issue with holiday apartments is that management fees and body coroprate can be extremely high, depending on whether the apartment blocks has a pool, lifts, airconditioning, etc. In addition, one major hassle is that it is the body corporate that decides what happens to the outside of the building.
I had a bad experience with a coastal unit where the salt etc was rapidly deteriorating the painting on the outside of the building. The body corporate would not agree to spend the money on repainting the building and so it stayed in its run down state for years. It was a real hindrance when it came to sellit.Hope this helps.
[
]I went on a holiday for a week to Merimbula about 4 years ago. Yeah – I am from Melbourne. We stayed in a holiday flat – that was 2 beds, two baths. It was for sale for $80k. The following year in the same complex another one was for sale for $150k. I am too scared now to even look there.
So Had I had more guts, it would have been a good investment. Anyway – one day I will buy a holiday house and let the tax man pay it off.
I biggest concern is the expense of management fees and inccuring cost of all that goes with it.
We had a unit on the Gold Coast and the on site manager was charging $10.00 to change an ligh bulb & $3.00 for the light bulb. Linen might get stained so it was replaced for about 50% more that I could buy it for and then charged to replace it. Knives & forkes, pillows, lounge suite, tv’s, washing machines breaking down, towels ect All were replaced and charged for without even telling us what was going on.
Cleaning was another rort. So out of a one night stay @ $160 we would probably see $80. Then then were BC fees which were really high etc. Hence as soo as the market lifted a couple of years ago WE SOLD!
My advise unless it is a really good price be careful.
Jarrod
Jarrod Lane Real EstateOne of the places was a hotel apartment in the heart of Melbourne CBD. The building was leased long term. The lease holder pays all body corp, council rate. The return was $10150 p/a (nett). Property for sale at $120K.
Net return is about $195 p/w …… any thoughts. I have found a few like this in melbourne and Brisbane
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