Hi all
This is my first post to this forum so here goes
I have just been looking on the net at units in the Brisbane CBD and i came across some units for sale in one of the larger hotel chains which are returning apparently 7% – 8% nett return has anyone out there had any experience in this type of investment
any info would be greatly appreciatedcheers
MicmanSome factors to take into consideration,
1. The size of the apartment my affect your borrowing capicity from your lender, some lenders will not lend as much for units under a certain size
2. how is rent distributed, Is it a guranteed weekly rental amount, or is it based on the average occupacy level of the entire complex or is it based on the occupacy rate of your room.
3. find out how the outgoing's are calculated, there will probally be management fees, lauandry fees and house keeping etc.
again are they based on occupancy or a flat rate,4. you will have to form an opinion of the future of this style of investment, can you handle the repayments if there is a down turn in occupacy due to econimic factors, less tourism etc.
5. what are the likely effects if the company manageing hotel goes broke and ceases trading,
6. Are you comfortable taking on an invesment where earnings swing from one extreme to the other,
7. can that style of property be rented out as full time accomadation, if is no longer viable for some reason to rent it as a hotel.
They sell with a higher yield for a reason.
Because they are not attractive investments and they need to sweeten the deal somewhat.
I wouldn't buy one. Look for a house and land deal or a unit with something special. View, location etc.
I believe that the main point have been covered by the previous replys. I am not a fan of Hotel units for the main reason that you state in your original post – which are returning apparently 7% – 8% nett return – If rents do not go up then the value of the unit stays the same as the next buyer is going to want to buy based on the same net %rate. Another problem associated with Hotel units is that they have a furniture package attached, which while they are depreciable they must be replaced at regular intervals in order for the Hotel to maintain its star status. I think that the real winners in hotel unitsare the Managers.
Jon
You must be logged in to reply to this topic. If you don't have an account, you can register here.
