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Investing in a Marina Berth

Discussion in 'General Property Chat' started by dan_89, 16th Oct, 2016.

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Purchase or lease marina berth?

  1. Purchase berth - Cash

    0 vote(s)
    0.0%
  2. Purchase berth - Financed

    1 vote(s)
    33.3%
  3. Rent berth

    0 vote(s)
    0.0%
  4. Purchase residential IP - Financed

    2 vote(s)
    66.7%
  1. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    116
    Location:
    Melbourne
    Interested in people thoughts in investing in a freehold Marina Berth.

    My old man an avid sailor has been talking for years about buying a berth and is now in a position to grab one following a new release in Martha Cove, Melbourne.

    Purchase price is around $150k with potential return around the $600per month mark. He will most likely be renting the berth out to his best mate at half rate around $300 per month.

    Body Corp fees are under $2000 pa. He will be looking to hold long term.

    IMO it is more of a lifestyle purchase rather than an investment.

    Has anyone here purchased a berth or know much about it? If leased and under finance,are there any tax incentives (eg. can it be negatively geared?). He has cash to fund the purchase so most likely will not be financed (pending discussion with accountant to ensure this is best option).

    Long term I think they will perform OK due to the limited supply of freehold berths in Melbourne however I would doubt growth will be inline with standard resi IP.

    The other option is to lease a berth and purchase another IP. He is not entirely keen on this idea as he will be looking to retire in the next 5 or so years and is reasonably risk adverse.

    Thanks in advance.
     
  2. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    116
    Location:
    Melbourne
    Based on the lack of feedback I'm assuming there aren't many on this forum stupid enough to buy depreciating assets big enough to require a berth! Haha :D
     
    MJS1034 likes this.
  3. hobo

    hobo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    425
    Location:
    FNQ
    You call it "freehold", but is it really? We've looked at marina berths but the only ones up here are all leasehold.

    I'd say it is firmly in the "lifestyle purchase" basket rather than an investment....

    Edit: Just googled and yes, I see they are listed as Freehold.
     
  4. Redwood

    Redwood Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    342
    Location:
    Melbourne
    Hi there

    I have a number of clients who purchase a marina berth in SMSF and some outside.

    Many are attracted as a 'retirement' asset. For me, for a long term strategy, I donot believe it is a great investment, yield can be variable and little to no capital growth with holding costs. I have never financed a berth so you are expending a significant amount of $$ for a birth and tieing up funds imo.

    They are pretty popular on the mornington penisula and heavily marketed to SMSF with a rental guarantee - again, emotional decisions are made.

    Cheers Ivan
     
    dan_89 likes this.
  5. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,589
    Location:
    Sydney or NSW or Australia
    Starting behind the 8 ball if rent < strata levies.

    <5% gross returns

    Who is the lessee - the user or Dalbora Marines etc?
     
  6. Heinz57

    Heinz57 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    493
    Location:
    Brisbane
    I live at a marina development and watched some of these investments sink in the wild weather of 2011...
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    5,589
    Location:
    Sydney or NSW or Australia
    @Heinz57 - Insurance or flood event?
     
  8. Heinz57

    Heinz57 Well-Known Member

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    493
    Location:
    Brisbane
    Well, flood event. But I don't know where that leaves the leaseholders and their $100k investments. Seems risky to me.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
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    Posts:
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    Location:
    Sydney or NSW or Australia
    Especially if they're only returning <5% gross - nowhere near sufficient to cover risk.