Buying a Holiday Unit on Qld's Gold Coast

I guess this falls into commercial - it's not residential anyway so here goes...

I've looked into buying a unit at somewhere like Mantra on View at the Gold Coast a couple of times in the past year. We holiday at the Gold Coast for a week once or twice a year and some weekends in between so you get the up to 28 days a year for 10% of the normal rate. Plus they seem to provide documentation that shows with typical occupancy you pretty much break even over the year (repayments vs rental income) with maybe a 2-3K shortfall at worst.

Given the small outlay and low repayment ($125K/550pm) are these a decent investment to consider? From what could you expect a return - capital appreciation? Higher occupancy if your unit is more nicely furnished, etc?

In 2015 when we first looked there were quite a few available in Mantra Legends for around 110K but nothing now. Cheapest in such Mantra complexes now are 125+ so is this market appreciating?

Thanks for any information.

 

I'm not a fan, personally. You want to go to the same place year after year for a holiday?
Generally, these are not great investments from a capital growth perspective and what makes yours unique come the time you want to sell?

 

Why not just use the $3000 (based on their figures) shortfall and pay for a room, that would cover about 12 nights and invest somewhere that actually has a chance of making you money.
Who will buy it if you need to sell? Just my opinion but I don't like mixing investing with lifestyle purchases.

A short term let in that sort of location may have higher wear and tear, breakages, items going missing, sand and damage. Furniture will need to be regularly replaced and updated.
These sort of investments are a dime a dozen in Cairns, there is a reason why they appear to be cheap. The Mantra may be different but I doubt it.

 

Thanks for the replies it's more or less as I thought. Just interesting that when I saw all those Legends units for sale I figured they'd be sitting there for ages but they are no longer around. I guess you never know the hotel may purchase themselves to keep such ads looking "fresh" next time they come up. $3000 does buy 10 nights in a good hotel even at peak season and you don't have to conform to their set periods of rental that way too.

I imagine the upkeep is high given the environment and you're also forced to update when the hotel wants to modernise or whatever too - a bit like body corporate in complexes.

@HUGH72 the main attraction vs another investment is the initial outlay/mortgage being so low - but it comes with the drawbacks of being at that end of the market when you do want to sell.

Cheers.

 

What exactly do you get for $125k? Is it a title with a management agreement? Can you OO the property? Change management?

 

Look at the lease agreement.
How long is it for?
Once the lease ends, will the unit be easy to rent? Some are just glorified hotel rooms.
Marg

 

We have just been to a similar resort, units privately owned, let and managed by the resort management. IMO these are not good investments. Capital appreciation is severely limited, you have little control how they let these and allocate bookings, the ongoing costs are also significant.

My view is the same as above, take the negative CFs you would incur and go on holiday when you want and to where you want, rather than being stuck to off peak (as peak is best time to let them out) times and having to return to the same place every year. They are a "nice to have" in theory, quite different in reality.

 

Timeshares and Commercial residential holiday rents....Not a investment. You are just funding their business. Dragged along on a passive ride. Illiquid.
Will your choice of lender touch it ? Often they recommend their finance as others wont.