Investing in Resorts

[prawn_86]

Does anyone have any experience investing in resorts/serviced apartments?

We are considering a small entry investment and think we have located a few decent priced properties to suit our budget, but a lot of them are actually units within a resort. Is there anything in particular we should look out for? Obviously vacancy rate is one thing, but looking for other ideas.

Thanks

[jbocker]

Hello Prawn86

I don’t have any experience with resort investments, but have looked at a few. I will only mention what swayed me from investing. These could be unjustified, and would love to hear from others where I may be wrong. Anyway that’s how I felt.

Found that in ONE resort the developer was still selling units even after a few years at the same price at the original price, which was somewhat expensive. Some of the existing owners were selling also at the price originally bought; the indication was therefore little capital growth.

There are management and maintenance fees which are controlled by a corporate body (I like to have control of these matters) I felt that their hand would always be out regardless of your earnings.

Always felt that when times were tough resort holidays were the first to go. I.e. Units are sold and/or holiday makers opting to do something else.

I never 'get' the answer to what land component you have, when the resort comes to end of life. (I have the same issue with buying a unit in a block of flats).

If a lot of people sell out at the same time there is selling pressure, in desperate times there could be discounting.

New resorts opening in the neighbourhood, competing for your customers, adding pressure to update your facilities.

What guarantee that units would be let fairly? There is also not real way to determine what amount of rent is coming (ie inconsistent)

Uncertainty of tenant behavior.

I certainly dont want to put you off. Have you considered a small unit with its own title. Cheaper and more likely to have a consistent income with longer term tenant(s).

Cheers
JB

[MelbKate]

Hmm I'm with JB on this one. We also had a good look at it and while the annual returns are attractive, the capital growth was just too slow for our liking. Also the risk of long periods of vacancy and high management fees would make it too expensive to hold.

[dohardmoney.com]

Can you drop me the location or any picture of the resort you are interested in.

[kristinthomas21]

Investing in the stations is carried sharply in the long run, when more people are choosing to take holidays in different regions of the world. The main advantage of investing in such property is the net cash income from the station. However, you should make sure you have good marketing strategies to help you successfully promote your station.