Frequently Asked Questions Q: Can I lease my unit privately? A: Yes. Only those purchasers who agree to rent through the Lufra Hotel Investments Pty Ltd and take out the furniture package would be leased by Lufra Investments. This means that you may privately lease the unit or alternatively use Real Estate Agents on your behalf. However, no guaranteed return will be paid.... Q: What advantages do I have if I use Lufra Hotel Investments as my leasing agent? A: If you provide your unit as part of the hotel leasing pool you will have the benefit of being part of the Best Western group and be able to take advantage of the marketing and accommodation that Best Western does internationally, nationally and within Tasmania. This provides you with a greater opportunity to have your unit leased at an optimum rate compared to private advertising and / or local Real Estate Agents. Q: If I don’t want to lease my unit can I live in it? A: Currently full time occupancy of your unit is not permitted under the council zoning for the site. Although that may change in the near future, currently you can only live in the unit for a period that is not designated as being permanent residency. Q: Do I have to pay for my own lawyer’s costs? A: No. The vendor will pay for your normal conveyancing costs with Solicitors, appointed by the Vendor, who are familiar with the project. You will be responsible for government charges and disbursements such as title searches, stamp duty etc. The appointed Solicitors are entirely independent of the vendor and of the vendor’s solicitors. You can use any solicitor of your choice, however, in those circumstances that will be at your cost. Q: Are there any offers of finance associated with the project? A: This is currently being negotiated with a number of financial institutions. Q: What is the expected date of occupancy? A: On execution of a contract by yourself with the vendor a 10% deposit will be paid which will be held in Trust until the final settlement date. Construction is commencing in June 2007 with a completion date of December 2007. Final payment is only made once the units have been fully constructed and approved to hand over at a mutually agreed date for final settlement. Q: Is my rental payment guaranteed? A: Depending upon which option you choose a guaranteed 5% will be made on the purchase price for the first year. Q: Is depreciation available? A: You will have the opportunity to depreciate the strata title unit, furniture and fittings within the unit and any common property of the strata title. Depreciation schedules are being prepared and will be made available at settlement in respect to Australian Taxation Office approved guidelines so you will not need to obtain further accounting advice in respect to this issue. Q: Why should I buy a unit at the Lufra Hotel? A: There are many good reasons: All units have absolute foreshore views. Units (should you choose) would be leased on your behalf within the Best Western group providing a maximum return on accommodation needs. Payments (less costs) will be made direct to your bank account. If leased by Lufra Investments you do not need to pay additional advertising costs or be involved in any direct relationship with short term tenants. You will be able to use the unit when you choose subject to conditions. Maintenance of the unit and common area will be handled through the Body Corporate. Q: What does personal usage mean? A: Personal usage is the use by yourself as the purchaser, family, friends and any other associates you decide have a right to use your unit. Certain charges would be made in respect to cleaning of the unit at post occupancy and additional charges if, during occupancy, cleaning of the unit was required. Extensive details on those costs and charges will be provided one month prior to settlement. Similarly details in respect to the leasing agreement with Lufra Hotel of your unit would be provided one month prior to settlement. Note: Should you want to occupy the unit during peak periods there will be a substantial loss of income for you from such a decision. Q: What am I buying? A: When purchasing a freehold strata title unit in the Convict Units Body Corporate at settlement you will receive a certificate of title in respect to the strata titled unit. Q: Can I sell at any time? A: Yes. You can sell your property at any time in the same way as you purchased the property. Q: Who maintains my unit? A: Should you lease your property through Lufra Hotel they will organise for the cleaning and maintenance costs which will be deducted as part of the income generated for your unit after the first 12 months. Q: Who owns the furniture? A: Should you decide to lease through Lufra Hotel you will have purchased one of two furniture packages which is owned by you and may be depreciated by you at the ATO rates. Q: Do I have to let Lufra let my unit? A: No. You can either choose to enter into that agreement as part of the Lufra Hotel letting pool or you can make alternative choices. Q: What are the responsibilities of the parties? A: Individual strata title owners are responsible for the payment of the rates, land tax, body corporate fees, electricity, contents insurance and their unit maintenance expenses. The Convict Units Body Corporate is responsible for the care of the common property, caretaker costs, common area insurance, strata title insurance and building insurance, landscaping and gardening and costs in respect to caretakers. Lufra Hotel is responsible for providing the caretaker arrangements with the body corporate, individual letting agreements with individual strata title owners, common area maintenance of the hotel and other areas of the hotel site. Lufra Hotel is the owner of the hotel and other areas of the site not including Convict Units Body Corporate. Should individual unit holders enter in to a lease agreement with Lufra then Lufra will manage the letting, maintenance and cleaning of the individuals unit. Q: Who pays the income? A: If the agreement is with Lufra Investments the lease agreement provides for them to pay the net income of the unit on a monthly basis, being the gross letting revenue less the costs as previously detailed. If an individual has taken the guaranteed 5% return that 5% will be paid monthly as 3% cash and 2% marketing for the first 12 months. Q: Is there any difference if I purchase in a Corporate Name or provide an ABN? A: There are significant differences if the purchaser is a professional with an ABN or a Corporate Entity with an ABN. The units, because they are brand new, attract a goods and services tax that is payable in respect to the purchase. Therefore a purchaser with an ABN will receive a price for the unit that is non-inclusive of the GST with the GST being added.(You must also be registered for GST with the Tax Office) Q: What does GST credit mean to me as a purchaser? A: A unit purchased at $359,000 is a gross price including GST that is payable. A tax invoice will be raised for approximately $326,000 with a GST component of $32,000 which provides the purchasing entity with approximately a $32,000 credit that can be used by them professionally or within their corporate structure. Q: So if I don’t have a ABN and registered for GST, I miss out? A: No, you may be eligible and should obtain your own financial/ legal advice. Q: What will the 5% be paid on in those circumstances where GST is payable? A: The 5% return will be paid on the non-GST amount of the sale. In the example raised above the 5% return as identified will be payable on the sale price of $326,000 not on the GST included price. Q: Is there an indicative or expected rate of earnings after the first year? A: Although there are no direct comparisons available for one and two bedroom self contained units it could be expected that the investor would obtain 50% occupancy rate at no less than $200 per night grossing figuring in the range of $30,000 to $36,000 before costs. Q: Do you have any specific legal advice regarding “mum and dad” superannuation funds? A: Yes. Recently a purchaser provided a copy of their legal advice from their solicitors advising as to the terms on which their superannuation fund could purchase a unit. Extracts from that letter are provided in such a way as to ensure the anonymity of the individual involved. “The ABC (name changed) Superannuation Fund is constituted by a Deed of Trust which inter alia is regulated by the SIS Act and the ATO. The ABC Superannuation Fund may make an acquisition… provided the real property is used wholly and exclusively in a business. The term “business” is defined in the SIS Act to include any profession, trade, employment, vocation or calling and carried on for the purpose of making a profit. In our view, the unit on offer from Lufra Investments Pty Ltd is one of a number of units would amount to the carrying on of a business for the purpose of the SIS Act because: the units are available for short and long term accommodation; the units are operated by an independent professional manager in an arms length; and the unit will either be offered by an independent real estate agent for letting and/or sale in due course or managed on a pooled basis but in any event would be operated as a business in a true sense and not as a hobby. In summary, the ABC Superannuation Fund is seeking to acquire a unit as part of a complex of units. Therefore, as the operation and the running of the complex of the units is considered to be the carrying on of a business, the unit would be considered to be real property to be used wholly and exclusively in that business.” The basis for that advice was on the following assumptions: “ The ABC Superannuation Fund may acquire a unit in the Lufra Convict Units development as it is business real property: the ABC Superannuation Fund cannot borrow monies in order to acquire a unit and the unit must be maintained on the basis of an investment to generate income for the ABC Superannuation Fund. As an additional note, the ABC Superannuation Fund is not to purchase the unit on an owner/occupier basis as it is a contravention of the SIS Act to provide a benefit to a member prior to retirement.” All investors should obtain there own independent legal/financial advice as to there circumstances. Register Below to access more details of this fabulous investment opportunity.