Advice please

Being a tourist destination can you holiday let it through a company that specialises in that arrangement? Would there be a demand for your property?

It may not necessarily be money down the drain if you’re getting capital growth with the property.

How much is the insurance on the place?

Hiya

Are you claiming depreciation?

How come the insurance is so high? Can you get a better deal?

Cheers

Jamie

That insurance is cheap or in par for FNQ. I’m paying about $2600 for my PPOR at Cairns northern beaches.

If the insurance review ever happens it may get cheaper but I’m not holding my breath for it.

North Queensland is starting to get a bit of focus of late (more so Cairns and Townsville) again so it may spill on to Port Douglas but as far as the market goes it doesn’t have a lot more to offer diversity wise other than being a tourist town.

Having done all the investigation of the FNQ / Port Douglas / Cairns area

.. the answer comes back …

… and its not pleasant.

Cairns .. Port Douglas .. Palm Cove

.. are weighted down with large body corp charges
.. are weighted down with expensive rates proportionate to the property value.
.. are in a zone which suffers from frequent damage from both flooding and hurricanes. (hence the high insurance premiums)
.. are allocated ‘holiday zoning’ priveleges for a large amount of property in the area .. restricting the tenancy supply.

A current example in Cairns sums it up nicely. The property is permanently tenanted at $250pw (13k p.a.) The combination of rates and body corp EXCLUDING contents insurance (bodycorp has a structural insurance for the whole premises) comes to roughly 10k.

So for this particular property .. you NEED a tenancy just to cover the bills, not including any loan payments .. or any work and repairs due or needed on the apartment.

If you are treating a property as an investment .. you need to be able to see demand for the property in years to come .. and not have it leaking money while you wait for that demand to eventuate.

There are properties in the Port Douglas area which stand up as good investments .. the area has been badly depreciated and there are some genuine bargains available at the moment which will provide a good investment long term. However .. most of the units are sitting there waiting to be sold .. based on the promises of developers who offered a part time holiday pad with an ongoing investment strategy that is never going to eventuate barring inflationary movements.

Hi Frangypani,
Wow – the options don’t look too bright right off the bat…. But the “holiday rental” might be a path worth researching….

Your story could be my own – but my property is in the Gold Coast Hinterland (in the mountains). We were losing steadily until we bit the bullet and made it into Holiday Letting. Now, we are NOT on a beach, but there is a call for pristine environments and fresh mountain air – and COLD weather. Our major letting season is Winter !! Go figure….

Anyway, in a nutshell, our GROSS rental income has virtually doubled from the usual family rental. Of course, there are costs, but they may come nowhere near the $8k you are losing anyway.

Do some research on things like – expected holiday letting income for YOUR area, extra costs (laundry, cleaning), and see whether your Nett Income would increase and by how much. It “might” be worth going that route. To furnish, we used “No Deposit, No Interest for x years” deals to make it habitable quickly, and without digging into our pockets.

What do the numbers say? Share them here – we may be able to assist in that way. And welcome aboard :)

Benny