Hi all, I'm sure this has been asked before but what are the pitfalls of these holiday let investments as the sums seem to add up when the body corporate fees are reasonable. This one in particular states 4% net return, 4 weeks of free accommodation a year and capital growth. 41 Rendezvous/121 Port Douglas Road Port Douglas Qld 4877 - Unit for Sale #121179538 - realestate.com.au If not rented through the holiday pool, they are stated to rent for $300 per week. Any advice?
Potential finance issues. Body corp wouldn't be pretty and having it in the letting pool - who's to say yours will be the one rented as opposed to the one a few doors down though you could have it holiday let by a separate company? I would be concerned about extended vacancy periods during the non peak times and if you have it on a normal lease then what would be the return then?
We bought our current PPOR resort unit approx 10 months before we were ready to move into it. While it was in the holiday letting pool and had very little vacancy, it cost us a fortune in fees . The biggest fee is the cleaning which includes laundry.. If the holiday let has a one night availability, the cleaning fees will kill any profit. If a holiday maker breaks a glass, (or plate or cup) management will charge them out at an exorbitant amount. (We have paid up to $10 per item . ) There is very little "maintainence" done. If an appliance doesn't work, they cannot wait for a technician, it just has to be replaced. We paid for a new washing machine when all that was wrong in the end was a stuck sock. There will also be a compulsory yearly "spring clean" which is kind of like a full bond clean. In our spring cleans they also replaced all the pillows (and doubled the retail price) in our resort, mattresses are changed after a certain number of nights use as well. While we love living here, if we were to move we would have it as a permanent rental rather than back in the holiday pool.
Holiday units would be in someone's portfolio as a yield play I would have thought and at a 4% nett return it doesn't sit in that bracket for me..
Thanks all for your input. I always wondered which investors actually bought these properties and how they panned out. No holiday unit for me yet
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