Property for sale with existing lease in place

I note on allsops catalogue a 2 bed apartment for auction with a very reasonable reserve. It is adjoining a hotel and the property is leased to the hotel operators. The income is mentioned as " owners profit share " and seem low for the last year that figures are available, 2011. It was constructed in the mid 2000's with a tax relief scheme.The adjoining hotel, Quality chain, has good reviews on tripadvisor, but a google search seems to indicate the presence of a reciever at one stage,its unclear if this is still ongoing.

What do you think ? Too messy for a small return albeit with upward potential or a good prospect for investment ??

All replies appreciated & answered

westgolf

Do you need this sort of complication?

It might be worth it if you were investing a few million and could afford to do serious financial and legal due diligence. But if you run into problems, they will be very difficult to solve.

Aren't there other examples where people "own" apartments attached to hotels and they can't access them.

Of course, if everyone thinks it's too complicated, it will reduce the price and so maybe it's worth it. My gut view is that those already in the scheme who know the inside story might be able to value it correctly. An outsider would find it difficult to evaluate.

An update

Good evening Brendan,

Thanks for your reply,

Yes I did think that if it seemed too complex to be off-putting that would keep the price lower as it would deter interested parties and the low access price was a key factor in the consideration.

As you rightly stated its all about reseach and due diligence. I dug a bit deeper and went through the legal pack on the property. It turns out that the solicitor involved in the initial set-up is, lets say, one of those "celebrity " individuals whom the law society would like to talk to,if they could find him. When I added that nugget of information into the mix it lead me to suspect,as you had suggested yourself, that there are other lurking issues to be dealt with so I decided to pass on this one and search elsewhere. I wont state the individuals name on here in case it causes a problem for you Brendan, but I can let you know the name privately if you wish ?

So ends Westgolf 5 minutes of fame !!

Regards

Westgolf