Holiday Resorts Investments..high yields = high risk?

Hello all,

I have recently came across ads offering units from the Seashells Resort in WA for sale.

This type of investment is quite common in exotic Islands and other countries but I would have never thought that Australia played this game.

Here is the deal: I contacted the agent who sent me back lots of material to document the net returns etc. and the numbers looked alright...the questions are:

-Too good to be true?

- What do you guys know about these offers out there and what is the reality?

Thank you all,
MB

 

What are the numbers like now? Not when they printed the brochure

 

I've come across about 15-20 different clients that bought these on the gold coast years ago.
Not one of them made any money.

A lot of time they spruik these to you on the emotional level as you can possibly stay in the resort for free, which is also not correct for tax purposes etc..

Management companies often change, disrupting things.
They decide to change something, most times owners have to comply and cough up the coin.

If I had to rate these as an investment, they would come in possibly lower than off the plan 1br apartments in Melbourne..

 

• How are the returns calculated?
• Pooled or individual bookings?
• How many weeks use do you get?
• How big are the rooms?
• Do you have to put the property into the rental pool?
• What fees and charges do yo get slugged with?

• Management
• Rates
• Services charges
• APRA
• ASIC
• Cleaning
• Maintenance
• Advertising

​

 

Thank you Greyghost for the insights and considering how you were disagreeing on the 1br apartments, your comment definitely stands out.

If anyone is curious or interested I can happily forward the agent;s email to you.

Thank you all for your answers!

 

No worries.
My advice, block the agents emails and throw away the brochures!

 

What sort of net yield does the investment offer?

 

Also think about the future when you decide to sell... The pool of people wanting to purchase that type of investment will be a lot less than for main stream properties, so you may find it may take a lot longer to dispose of the asset.

 

One thing I've seen happen years ago is that the investor was locked into an agreement with cleaners and the place didn't rent as well as they thought it would have. The cost of the cleaners used up a lot of the profit.