- This topic has 0 replies, 1 voice, and was last updated 14 years, 8 months ago by .
-
Topic
-
QUESTION: I’m looking at buying a one-bedder in a hotel conversion as an investment property. The asking price is about $550K and the average rent is $650 per week.
That seems like a good return, especially since this building has a reputation for poor noise insulation. Is it too good to be true? – Brunhilde, Potts Point.
ANSWER: Sounds like you might be looking at a classic ‘trampoline’ apartment block where tenants bounce in and out while they get the lie of the land on their way to something better. As a former hotel, it may also have a lot of short-term lets.
This means that the $650 a week income could be eroded by periods of vacancy and associated letting fees. For instance three different tenants in a year with, say, two weeks of vacancy before each one, is going to cost you 12 weeks rent (the usual letting fee is two weeks rent).
Suddenly your $650 a week is more like $500. So ask how often the flat lies vacant and for how long, and check the turnover of other properties in the building. It could be a bargain but don’t get bounced on the trampoline.
Landlord or tenant problems? Log on to the forum and ask a question.
If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.