I have been offered a investment share in the following resort development due for completion in around 3 years. I was hoping that some of you may have had experience with these types of investments and could possibly advise me if i should go ahead
Any ideas or advise would be fantastic
Heres a quick run down they gave me it set as a budjet 3 years from now.
Havana – Port Douglas
Purchase price 650,000
Costs 93,000 (stampduty legals and dep.)
Borrowed amount 613,000Room rate 355
Occupancy rate 48% (assumed)rental income 62,196
Operating expenses
fees 50% + gst 34,207
insurance 400
body corp 4000
council rates 1500
interest on borrowings 44,388 (6.09%)Total costs 84,495
Cash operating cost rental-costs 22,299
depreciation (estimate) 27,800
Total expenses cash costs + deprecitaion 112,295
tax rebate rental income – total expenses 50,099
Tax rebate 24,298
positive cash flow tax rebate – cash operating costs 1,998
all these figures were provided by belle property
It also has the advantage that you can use it for nothing in the off season, it is fully furnished and on the second floor, there will be four of us on this one deal
Any advise would be appreciated
Thank you once again
David
Hi Berazafi,
A friend i know was telling me something about something similar. a while ago now.
Be weary of these developments as alot of lenders would probably not touch it especially for investment purposes; make sure you can get finance first.
Valuations on properties in these areas could possibly take a minimum of one week (probably wont cause too much trouble if finance is not required in haste).
Hi
Be very very careful. I just came back from Port Douglas, and they are really overbuilding there. I chatted quite a bit to people working in the resort industry there, and they said that the vacancy rates are already ridiculously high. Its so very seasonal up there. The high season is between July and October. After that, the vacancy rates run at around 85%! Prospects of capital growth on the new places they are building are thought by many people to be slim.Even on the figures provided to you by the developers, your profits are pretty marginal. Particularly given the size of the risk taken on with that loan. In addition, the Havana development is several miles from town. I’m sure the beach is nice, but it is really stuck in the middle of nowhere. The units have also been for sale for quite a while now.
Make your own decision, but look at it very closely.
Good luck.
On saturday I signed a sales contract for my hotel unit at Magnetic island, capital loss 90,000, yearly losses over 6 years: 12,000.
I paid 105,000 originally.
You are talking about investing about 600,000?
I would suggest you are heading for financial disaster.
If you have and must spend that money go for something free standing by the coast.
We have sice heard that managed resort developements up and down the QLD coast have a 100% failure rate, yet people are still being sucked in.
I will continue to advise anyone who writes in against this, it can’t save my loss or my fellow investors, we have collectively lost 10 mill., but it might save your financial future.
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