Hi everyone,
I would like to hear your opinions about investing in hotel rooms. I have come across this deal in realestate.com.au. For sale is rooms/apartments within the Rockford Resort in Mildura (they own Rydges hotels amongst others). After settlement, Rockford then rents the room/apartment back from buyer at 8.25% of purchase price on 5*5*5*5*5 years. It seems like a good deal to me, but many of my peers (none of whom have investment property) are saying that it’s dangerous and sounds like a scam. Does anyone have a similar experience? What is the general, educated, concensus on such investments? Thanks for your thoughts and ideas in advance.
Best, NThere are a huge array of questions you may want to answer for yourself:
– What is the occupancy rate of the resort (& comparable resorts) for the past couple of years?
– What is the long term tourism potential of Mildura VIC? (Try the local gov.t for research)
– What is the strength/experience of the management team running the resort?
– What happens if the resort doesn’t sell rooms? Are they obligated to pay the 8.25%?
– Have the room’s always been strata titled? If not, why are they selling them individually now?
– Are there management fee’s, body corporate fee’s etc that will need to be paid out of the ‘guaranteed’ return?
– What is the state of the building sinking/administrative funds?
– How old is the building? Are there any capital works planned & when? Will the sinking fund pay for the works or will the body corporate (owners) be slapped with a hefty special levy?
– If the mg.t can default on the 8.25% return or mg.t go bust for instance, what are your prospects of letting the room out privtely?Luke Woollard
Licensee
Pacific Lifestyle Property
http://www.plproperty.com.aucomments made are general information only. you should seek professional advice for your particular circumstances.
Hi Luke,
Thanks very much for your comments.
There was 1 other enquiry similar to mine in the forum and the general consencus was that because of bank’s unwillingness to leand more than 65% for properties like these, it can be difficult to re-sell.
So, I will need to do further research.
Best, N
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