can anybody help.I am looking to invest in an appartment within a hotel, ie outrigger, now they call the shots,as in letting the room out but the past returns look very good.i know finance wise i will have to put down 50% deposit but it is a good price,i havent bought an investment property yet so i am very wary!!
Many Thanks
Paul.Hi Paul
I looked into this type of investment in Perth about 6mths ago, they seem to be cash positive but do not expect to much capital growth.
They had only a little capital growth in Perths boom.
Celeste
G’day Paul767,
I would not suggest such an investment for the following reasons:
1. As you know, you have to come up with a substantial deposit. Using the 50% deposit on a purchase price of $125,000 (I don’t think you’ll find an apartment cheaper than that) means an initial investment of $62,500 plus closing costs (say another $7,000). You are looking at a deposit of almost $70,000. Assuming LVR of 80%, you can buy a residential property of $400,000 plus $20,000 closing costs. With a larger starting position ($400,000 worth of property vs. $125,000 worth of property) you will tend to have a larger capital gain if there is growth of say 10%.
2. Generally, the investments in hotel apartments have significant on-going costs including body-corporate, management fees, etc. The gross yield looks impressive but its the net yield that you need to consider.
3. The capital growth on these investments is usually very limited.
Hope this helps!Sanjiv
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