Hi,
Im hoping for some words of widsom from anyone in the know.
I am originally from England and although I have been reading Steve’s books about investing in Aus, I believe I will learn most from getting on in there and doing it…….but its scary [blush2]
Ive come across a property that from the outset looks very promising. My concerns are firstly its in Queensland and I’m living in Sydney and secondly, its a property that is also in part a holiday restort. My intent will be to continue to let it as a holiday apartment.
If I was to ask if there are any obvious things I should investigate before taking the next step, would anyone be able to give me a little guidance.
All offerings will be very much appreciated.
Thanks,
PaulaHi Paula,
Congratulations for wanting to improve your ‘lot’ – you are amongst friends here who are pursuing thing albeit we may have slightly different philosphies.
For starters do not be afraid to buy an investment removed from your place of residence. There are many here who do exactly that with some people owning IPs across the country and in some cases even overseas.
Provided you are able to do your own research and undertake your own checks and balances and have access to ‘local experts’ then you are well on the way to success.
As a general rule ‘holiday lets’ do seem attractive investments from a numbers point of view.
However (there is always a but) make sure that the occupancy rates are realistic and check to see what costs are involved. Some holiday lets do have very high costs which can make gross returns look less than rosy after all costs are considered.
You will need to consider management fees, cleaning fees, fixtures/fittings and furniture replacement costs (which may or may not be considered in strata fees), rates, strate fees, advertising costs and so on.
Other factors worth considering is the financing and resale of these units. Most lenders tend to consider these as riskier propositions and as such will not generally lend to the 80% level typically found in residential property – as such this property may take more than its share of available equity. Obviously this is less of a problem if you have equity to spare but otherwise it can create a longer term problem.
Many investors tend to steer clear of holiday rentals as investments and you may therefore experience some difficulties selling in the fture and/or realising gains made.
I also recommend you do a search of the forum as other people have asked similar questions in the past.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Thank you Derek. Having experienced people to bounce questions off makes the road a little easier to travel.
There are one or two things you mentioned that I have not asked about already, but will do so before jumping in.
Regards,
Paula.What town or suburb is your target in? Don’t give away too much info, but ask if anyone else is renting in the area and can give you some resources to check out the offering.
Also, do the figures and be clear as to why you are doing this. Does the property fit into your strategy? If you haven’t got a strategy, get one of those first.
Cheers
Originally posted by quiggles:be clear as to why you are doing this. Does the property fit into your strategy? If you haven’t got a strategy, get one of those first.
Good comment Quiggles – got to know why the property is being bought.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Derek is right in regards to financing such a property.
If it is a condition of the contract that the unit be placed in the Hotel Letting Pool then this will certainly limit your choice of lenders who want to lend against such proposition.
In saying that i have recently financed a couple of units in a complex up at Harvey Bay for a client and they appeared to show quite profitable returns
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Hello All,
Unfortunately I bought my first i/p without the due diligence / knowledge [confused2], so definately work out a structure / plan on what you want to achieve in your investment career / portfolio.
Like all i/p they can work if part of your plan, what can seem appealing to you may not be appealing to other investors, maybe because it is not part of their strategy.
If possbile speak to other owners in the complex to see what their perspective is on some issues such as:
Management of complex
Vacancy rates
If any have sold and how much forTry and find out why vendors are selling too.
Cheers and goodluck.
Funnily enough [biggrin] put a deposit on one (S.T.F.) in Maroochydore about 6 years ago, and for $250k a 2 bedroom penthouse on the beach etc etc., but after a lot of intense questioning it became clear that the Manager or people who had the Management rights owned three of the 12 apartments. Guess who’s apartments had the lowest vacancy rates?
Guess who didn’t buy???? [exhappy]
[thumbsup2]Thank you for all of your replies.
I have been putting many questions to the real estate and property managers and its good to see that the questions I have been asking are the ones that you suggest here in the forum. It’s a bit of a confidence builder knowing that I am headed in the right direction.
Also after chatting with the bank, they will only lend 65% because the title on one of the properties is a community title and not an individual title. Another important peice of information and another question added to the list of many [exhappy]
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