My steal of the week. $20,000 cairns unit which vendor paid $113,000 for rent $160pw.

113k to 20k, im sorry, whats wrong with it?

Obviously the vendor needed a good loss to offset against another cg. Must have been some serious motivation there for the vendor.

What does that indicate for the wider Cairns market.

Personally I think you have to be a mug to buy into these types of properties. The area was saturated with these units back in 07/08. They sold for around the $115k mark with a guaranteed return up to a certain date. They were dressed up to suck in investors. The scheme or rather scam is property developers build resort type complexes and sell the units off with a guaranteed income for a certain period. The investors actually pay for the whole resort but end up owning only the rooms with fairly strict contracts.

They call them studios but that’s marketing BS. They’re just hotel/motel rooms (bed, bog & bath). It’s not practical to manage them yourself. Why would you bother for a few dollars a week anyway that’s if they’re actually turning a profit which I doubt.

I think young Nathan will soon learn why this property is so cheap. It looses money. There’s 20+ of these within spitting distance of each other and 13 alone in the same street. RE in this suburb turns over at a fairly hectic rate by the looks of things.

Nathan I can’t understand why a multimillion dollar guru like yourself bothers with penny ante stuff like this

Sorry Engelo. The original owners got suckered into a deal that just didn’t pan out. If the global balls up coming down the pike was different and you had a rising property market things may have been different (still more suckers in the pipeline).

It’s irrelevant what Nathan has paid for it. Cairns is highly dependent on tourism and that’s taking a hiding over the last 2 years. The original owners where promised something like $220/wk as a return on $115k. They were over priced from the start and now the market has turned. Purely commercial properties with hefty holding costs are worth squat in this market. This property listed for $29k. That has to tell you something when the seller dumps it for $20k and others are prepared to take a capital hit to unload into a falling market.

$20k may seem cheap for a little holiday hut on the side but when you add holding costs into the equation it’s gotta be the most expensive getaway out there. I can park up in Malta (2 bed fully furnished) for AU$130-180/wk, SE Asia for AU$130/mth. Your little gettaway in Cairns is a rip-off in comparison.

The PI market is completely different to just a few years ago. The old buy anything it’ll go up days are over. PI now requires actual investing skill. Something very few here understand.

Jack

Holiday Accom is a very difficult market, there are some great opportunities, I owned three of them however you need to look at booking fee of about 20%, change over and cleaning fee and you Body Corp fee and in many cases a management charge.

In a recent no reserve Auction for a developer at a well known ski resort, there were many so called bargains however the cost of owning in many was higher than the returns so even if you bought for $1 you would lose money.

I looked at some in Japan and the same deal, no matter what you did, costs outwayed income.

Be very careful in that market, it can be a great investment or it can look a lot more like time share in the end where you carry the costs but own very little. 

have you stil got this property in the portfolio nath?

https://m.realestate.com.au/property-studio-qld-woree-107265403

Address is
307/1 Anderson Road Woree, Qld 4868

107/1-21 ANDERSON RD
(1 to 21 ANDERSON RD RD) *
WOREE L107 BUP100437:PAR CAIRNS
CASHFLOW KID PTY LTD AS TTE 30 m²
$20,000 26/08/2011

30sqm not something I would normally consider, basically a hotel room, a small one. But to be fair @terry the story was true. I get offered this kind of thing on 10% yields all the time usually just ignore, due to no banks will touch it for a loan. If you want to buy cash property for cash flow then fair enough.

daniel vic wrote:

have you stil got this property in the portfolio nath?

@daniel-vic Nath hasn’t posted here regularly for quite some time but yes it appears he does on the records.

Agreed @terryw I prefer coffee.