Forum Replies Created
Electricity, along with all expenses are tax deductible. With regard to the split up of the money, my unit is actually in a resort in QLD. I am charged 12.5% mngt fee, plus 5% marketing (covers QANTAS brochures, etc), plus all outgoings (eg. cleaning at the end of a stay).
With the new managers i have had over the last 2 yrs, they stated that the costs should be between 38% & 43% (this includes mgnt fees, linen, pabx hire, pay tv, etc), which they have been (shame the original managers couldn’t (wouldn’t!) obtain this, but life goes on). So I guess your 60-40 split would be quite reasonable, particularly if they are responsible for all repairs.
I guess the bottom line is, you have to be happy with the figures, and as long as you have an exit strategy if something goes wrong.
Cheers,
Geoff
To clarify a few points for you. The rental pool refers to the unit being centrally controlled by the on site management, as opposed you doing the bookings yourself – I know of several cases where this is done, but mainly refers to holiday bookings (resorts). In your case, it is the rooms that the hotel actually rents out on your behalf.
You will need an ongoing rental agreement for this which will specify the rates that you will receive per day the room is used. Be carefull with electrity costs, my last one was over $600, when the average was about $240. They are outside both your & the hotels control.
Who pays for repairs? Most agreements in my experience allow the management to spend your money up to a certain limit (maybe $500) without your approval. For example, if a door lock is broken at 2:00am, they will call a locksmith to repair it asap.
The other consideration is the occupancy rate. If the actual rate turns out to be only 50%, then you can kiss half your income good bye!
Hope this helps,
Geoff
From personal experience i wouldn’t touch it. I am in the process of selling an apartment in QLD, after losing a substantial amout of money. If you want a really good negative geared property go for it, but be aware of the problems that may catch you out.
I’ve had this property for over 5 years, and it is only now that i can actually sell it, after having to hold it until i got some good rental returns. It would actually be close to being positively geared now, but looking down the track, and knowing the history of this place, now is the time to move on – I will be pricing it so that it will be attractive to all those negative gearing investors out there!!!
The majority of the problems were with the original “managers”, who we discovered was trading without a licence. The whole process started when the manager shafted his business partner (actually somehow managed to legally steal his partners share!). To get motions through the body corporate, the manager went and bought another unit in the complex (why? – because he could!)
The majority of owners even got together on a regular basis, and submitted a complaint to the QLD office of fair trading over his actions. Despite having a file that was quote 10 inches high unquote, and the investigation being handed to the most senior investigator in QLD, and the manager offering to return the majority of commissions that he took, what did they do ?
NOTHING!!!!
Why did we not just take him to court? This person had so much money, that he would have just tied us up in court with delays, costing us legal fees. why? because he could!! The Body Corporate had already paid around $40,000 in legals as a result as his actions.
It was 2 years wasted. Sorry to be so negative about this concept, but i will only do deals in future where i have complete control of the situation.
Cheers,
Geoff
Wouldn’t touch it. If we are to do things differently, why would we hand over control of our asset to someone else. To me it is the same as investing in other properties that are “managed” by a third party. I have had personal experience of this when some years ago (long before knowing about SMcK!), and have found it to be the most unpleasant experience (litigation was involved). It is only now that I am able to sell it to recover my money, so that I can move onto more constructive deals.
