Just recieved an offer from a friend wishing to sell his property, believe it’s a fully serviced unit for holiday makers and i asked a few questions, i’ve posted his response..as follows:
So many questions….
****** , Price $265K to $280K Fully furnished,
**** has seen it plus I just paid $2700 to get it repainted about 2 months ago.
12 units in total in the group with pool and tennis courts and BBQ as common.
The unit is *******, 3 min to shops (video, tavern, supermarket, Thai restuarant, etc and less than 1 min to beach.
Total out goings including management fees $1500. per 1/4 plus $80. p/w for cleaners.
1 master bedroom with ens and robes,
1 large double room with robes,
1 double room with single beds,
1 loft with two single beds that can sleep a lot more.
2nd bathroom / laundry with washing machine,
dryer, iron equip etc and much much more….Rental changes per season but at the moment (peak season) $2270 per week
income last year $22’000.00[/i]
“doesn’t fit the 11 sec rule at all but my question to you -what do you think of this deal ?”
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi Redwing.
Was just running thru your figures. It’s not a bad -ve geared property (almost neutral geared too) but being a holiday unit I believe it carries with it a higher risk. I have heard that holiday units are harder to sell than other types of property and of course you have the risk of it being affected by an off season and the inconvenience of irregular payments.
You can get the same type of -ve geared deal with a traditional property any time you want so why do it with an IP which has a higher risk attached?
Regards,
Karan.Hmm
just had a basic look at the figures..$80 p/wk for cleaners x 52 = $ 4160.00
$1500 p 1/4 management fees x 4 = $ 6000.00$4’160+
$6’000
= $10’160$22’000 per year profit –
$10’160
= $11’840Resulting in about $227.69 p/wk cash coming in.
Thats assuming all goes well, can’t seem to bring up any “mortgage calculator” graphs on this computer so don’t know what the repayments would be on a $270 K Loan ?
There’s better deals out there and i believe with these type of things management choose the cleaners, usually themselves ( the caretakers) and all repairs and maintainence are handled by the management for which top dollar is paid and they sometimes get a fee of the contractor for using him.
Was interesting to look at and a nice place.. but not a good investment.
As BLOWIE said in another post there may be stipulations that you have to get new carpet every five years or re-paint etc also what happens if the tenants the management put’s in place trash the place etc, use a dodgy credit card or such, as generally it’s short term stays.. just had a horrible thought “schoolies week” [}
][]
REDWING“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:
Purchase price 270000
Initial cash spent to aquire prop
Deposit 0
Closing costs 13500loan
Principal 256500
Type Interest only
Term 30
Interest rate 6.20%
Weekly repay $305.83Annual cash flow received
Rent per week 420
weeks 50 (assuming 2 weeks no tenant)
Total cashflow received $21,000.00Annual cashflow spent
Loan repay 15,903.00
Management costs 6,000
Shire Rates and Water Rates 0
Insurance 200
Repairs Maintenance 4,160Total cash outflow $26,263.00
Annual cashflow position
Total cashflow in $21,000.00
Total cashflow out $26,263.00Annual net cashflow -$5,263.00
Weekly net cashflow -$101.21Cash on cash return
Annual net cashflow -5,263.00
Initial cash needed 13,500.00
cash on cash return -38.99%As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.
Regards,
Karan.Namaste,
Could you please send me that spreadsheet. Im always after new gadgets to fiddle around with….
My email is [email protected]
cheers
timMoney is an elastic resource, it can be created. Time is not.
Hi Redwing,
Re the holiday unit, is it let through an agent or does it have on site management?
We were thinking of selling a 2BR holiday unit with on site managers but have decided against it, one reason being that the manager buys the management rights at considerable cost and it is his business so he is prepared to put in a lot of time and effort to run a good business to get his own income.
There certainly are costs involved and there are seasonal returns, but we purchased this particular one a year ago for $95,000, paid 10% deposit, IO loan, and the returns have been good, up to $1500pm nett for a few months. We’ve just had a look and talked with the managers and were impressed with how they are running the unitsand keeping the whole block to 4 star standards which I gather is based on how the property presents, inclusions, eg dishwasher, etc. They are in the process of some refurbishment and external painting, the latter paid by B/C, we agreed to pay for new bedspreads and curtains.
I answered a post recently where I thought less of the ‘pooled’ type of letting but having seen more and asked a lot of questions when we were there, am happy with the outcome. Gives a varied portfolio anyway. The previous onsite managers were lazy, these took over early in the year.
Anna
If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.Regards,
Karan.Hi Karan,
If you could send me that spreadsheet too that would be great please. My email is adam.baden-clay (at) defence.gov.au
Thanks in advance,
Adam
Don’t Let Life Get In The Way Of Living
Hi Karan
if its ok i would appreciate the spreadsheet send to [email protected].
thanking you
regards
alf
Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:Purchase price 270000
Initial cash spent to aquire prop
Deposit 0
Closing costs 13500loan
Principal 256500
Type Interest only
Term 30
Interest rate 6.20%
Weekly repay $305.83Annual cash flow received
Rent per week 420
weeks 50 (assuming 2 weeks no tenant)
Total cashflow received $21,000.00Annual cashflow spent
Loan repay 15,903.00
Management costs 6,000
Shire Rates and Water Rates 0
Insurance 200
Repairs Maintenance 4,160Total cash outflow $26,263.00
Annual cashflow position
Total cashflow in $21,000.00
Total cashflow out $26,263.00Annual net cashflow -$5,263.00
Weekly net cashflow -$101.21Cash on cash return
Annual net cashflow -5,263.00
Initial cash needed 13,500.00
cash on cash return -38.99%As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.
Regards,
Karan.
Hi again redwing. The loan repayments on $270000 is $15,900/yr or $305pw. So there goes any profit. Add that to those management costs and it becomes a -ve geared property. Here’s the figures:Purchase price 270000
Initial cash spent to aquire prop
Deposit 0
Closing costs 13500loan
Principal 256500
Type Interest only
Term 30
Interest rate 6.20%
Weekly repay $305.83Annual cash flow received
Rent per week 420
weeks 50 (assuming 2 weeks no tenant)
Total cashflow received $21,000.00Annual cashflow spent
Loan repay 15,903.00
Management costs 6,000
Shire Rates and Water Rates 0
Insurance 200
Repairs Maintenance 4,160Total cash outflow $26,263.00
Annual cashflow position
Total cashflow in $21,000.00
Total cashflow out $26,263.00Annual net cashflow -$5,263.00
Weekly net cashflow -$101.21Cash on cash return
Annual net cashflow -5,263.00
Initial cash needed 13,500.00
cash on cash return -38.99%As I said you can get that kind of deal anywhere without buying into a holiday unit situation. If you want the spreadsheet I use to calculate those figures let me know and I will email it to you. Some kind forumite sent it to me a while ago and I’ve found it invaluable.
Regards,
Karan..
Hi Karan,
I’m new to this site and property investing and would love your spreadsheet.
Regards
Rebecca.
[email protected]
fanxHi KARAN (NAMASTE)
Would love to recieve your spreadsheet to evaluate, thanks [
]Please e-mail to barrytspencer “at” yahoo.com.au
Thanks also for the loan repayment figures, don’t know whats wrong with the computer re; calculator graphs such as westpac, realestate.com… i’ll have to search out better calculators or one’s without a graph!
Annaw2
His property is let by the on-site managers
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Great to see people makin use of my spreadsheet creation… Yeha…
Its a very simple way to differentiate between what sound like a good deal and what IS a good deal…
Hi kelvinh,
I have told everyone I have emailed the spreadsheet to that I can’t claim the credit for it. Sure has saved me a lot of work and helped cull the crap from the possibilities.
Thanks again
regards
Karan.KelvinH and Namaste
Thanks for the spreadsheet… the quick response!
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
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