Holiday properties with positive cash flows

Discussion in 'Airbnb & Short Term Letting' started by Katarina_Investor, 15th Mar, 2019.

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  1. Katarina_Investor

    Katarina_Investor Active Member

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    Hi
    Could you please share your location knowledge of holiday properties with a positive cash flow? We are looking for a resort apartment for around $200 - $250K apartment with 20% deposit in Port Douglas, but are open to any other profitable locations.


    Thank you
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Things to avoid"
    • Anything with a management agreement in place
    • Fixed increases for charges (eg: cleaning), not subject to a market review
    • Commission taken regardless of other letting fees having been charged (eg: Internet booking agents taking 20%), then the manager will also take their 15-20% again.
     
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  3. TMNT

    TMNT Well-Known Member

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    So many red flags in two sentences
     
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  4. See Change

    See Change Well-Known Member

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    Briefly looked 2-3 years ago . Maintenance is a very high cost up there and in Cairns . Wouldn't expect you to be able to find one cash flow positive .

    Cliff
     
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  5. Katarina_Investor

    Katarina_Investor Active Member

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    Thank you. Are there any agencies who would be happy NOT to have a management agreement? I am over 3000 kms away, so will be able to do the marketing, but not the management - painting a scratch, repalcing a broken toaster, etc...
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    You should have a look at someone who manages airbnb type properties. There may be a few in the area.
     
  7. Trainee

    Trainee Well-Known Member

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    Dont see any mention of capital growth. Whats the plan here? Why focus on cashflow at a low price point? Because thats all you can afford, or you think negative cashflow doesnt make sense / is wrong?
     
  8. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent

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    Hi Katarina,

    It is great to hear that you want to buy a holiday house.

    If I can make a comment though: I think you are mixing your genres a bit here. Having a holiday house is a great idea, but it's not an investment. If you are treating it like an investment, it will disappoint you. It will be high maintenance and low growth.

    So if you want a holiday house, definitely buy one and Port Douglas is a beautiful spot. But don't call it an investment property.

    Just my two cents.
     
  9. Kesse

    Kesse Well-Known Member

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    Find out what the body corp charge. Generally not cheap up here.

    Make sure there's no exclusive agreements in place with on site managers - you could have an awesome on site manager or you may not....

    Why would someone book your apartment compared to the other however many places available which are essentially the same? What's to stop people with similar places undercutting you? You will need a point of difference to keep the occupancy rate up.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    My parents had a holiday for a few weeks and rented an apartment. They had a wonderful holiday and decided that buying an apartment there would also make a great investment. They'd have access to a holiday unit and they'd get rent to pay for it.

    For the next decade, they had more great holidays. Unfortunately because they always used it themselves during the peak periods, they rarely had tenants and thus they received almost only a negligible amount of rental income. They might have covered the management fees.

    Also, the property had no capital growth during that period. When they finally sold, it was for about they same amount they purchased it for.

    If you've going to buy a holiday apartment, treat it as an investment. If you want to take a holiday there, rent the unit next door.
     
  11. Katarina_Investor

    Katarina_Investor Active Member

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    Capital growth would surely be a bonus, however I'm aware of low/no capital growth in areas with seasonal demand.

    It is mainly a lifestyle idea long-term - I would like to pay off as much of it as possible and at some stage move in there, work part-time as I won't have the pressure of a $800K mortgage like I do in SYD, and consequently spend more time with my young kids.
     
  12. TMNT

    TMNT Well-Known Member

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    even my 8yr old said to me one day when we were discussing holiday rentals,
    so do you have to kick out the tenants when you decide you want to go for a holiday?
     
  13. Depreciator

    Depreciator Moderator Staff Member Business Member

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    Gee, it's a long way away to buy a holiday house. It's unlikely to grow in value, will cost you more money than you expect every year, and you'll only use it maybe once or twice a year. It will also get hit by an extreme weather event every couple of years. I would look for a holiday house closer to home.
    I had an apartment in Port Macquarie for some years and used it often. I think if I did it again, I would buy a flat on the lake front in Forster. It would still lose money and not grow much, but I would use it often.
     
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  14. Katarina_Investor

    Katarina_Investor Active Member

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    As replied to one of the posters above, I do have a view of living there eventually, once a large portion of it has been paid off, and yes, there are a number of reasons why I'd choose FNQ over Central/Upper North Coast
     
  15. Trainee

    Trainee Well-Known Member

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    Thats a very bad plan if thats what you want. Invest somewhere else, make money, and rent holiday homes in your later years?
     
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  16. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    You'd need to be careful with your choice as not all will allow you to live in them.
    As others have alluded to you may find that it's a better decision to buy an investment property that will provide better income than a holiday home then when you wish to retire up there you can buy the property that you wish to live in.
     
  17. Depreciator

    Depreciator Moderator Staff Member Business Member

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    Yep. I agree. Make your money elsewhere and buy a property up there one day to live in if you still want to. My brother has lived there for 25 years. Right now, he is grappling with the conundrum of kids leaving school and having limited local options. I suspect he'll lose them to the bright lights of Brissy.
     
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  18. Brady

    Brady Well-Known Member

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    Not big fan of the idea, locking away capital for a period of time with very little upside.
    Risks outweigh the benefits IMO
     
  19. Katarina_Investor

    Katarina_Investor Active Member

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    Thanks, how is he finding life/real estate situation up there overall? (I did find the local crowd/community there quite decent)
    It's becoming more difficult for me to work full time as the kids are getting older and require a lot of help with school and after school activities, on the other hand with part-time work it'll be almost impossible to have a decent quality of life in Sydney or any other capital city, so evaluating some options...
     
  20. Depreciator

    Depreciator Moderator Staff Member Business Member

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    He lives between Port and Mossman on 20 acres. School activities are more complicated up there because of distance and the lack of transport options. There were many inevitable trips to Cairns. Tough climate, too. He has told me how the humidity and rain often breaks southerners who move up there. Not a lot of work up there, either. Especially in the off season.
     
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