Quote:
Originally Posted by PeanutButter
https://www.realtor.ca/real-estate/2...soyoos-osoyoos
Friend of mine got back from Osoyoos as he stayed at the Watermark and sent me this listing as he loved the resort and he wants to pull a HELOC on his house and buy one of the units... He has over $1M of equity in his house.
It's one of those hotels that you can buy a room and you get revenue sharing when you don't stay in the unit.
This one is a one bedroom at $249,000. No mortgage available due to the type of real estate it is, so you need all cash. He got a hold of some of the numbers...
$38,621 Revenue
$16,826 Net, paid to owner after all expenses
$1,982 Property tax
$497 strata/month
= 3.56% annual yield on $249,000
I told him it doesn't seem like a good idea especially when you can get 5-6% on a GIC right now. Any investment right now needs to be making at least 7-8% before you invest otherwise you might as well just get GIC's as they're risk free.
Am I missing anything here?
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Seriously... 3.56% is laughable at best. GIC would get him 5%+.
The only way this could make sense is if he's going to go there quite a bit, and instead of spending thousands every stay, he just goes.
But as an investment, it doesn't make any sense at all.
A decent commercial lot with AAA tenants (meaning they are pretty much impossible to default on rent payment) with 10yrs+ on the lease in US would get you 5% NNN (0 LL responsibility) with annual 2-4% increase on rent, and decent depreciation to write off from income to lower the taxes. Just FHI what cash can do nowadays in the market. These are kinda retirement properties that basically guarantees a regular income.