Why buy hotel rooms

Five reasons to consider investing

If you’re considering investing in property, especially overseas, then there is no shortage of available options. From traditional holiday homes, to time-share opportunities, to off-plan villas, they all have their pros and cons but one property investment is becoming an increasingly common alternative – buy to let hotel rooms.

Buy to let hotel rooms, apart-hotels or condo-hotels...

Call them what you will but the concept is incredibly simple.

Hotel and resort developers offer individual investors the chance to buy hotel rooms within a high-end development. The investor benefits from an annual income, the capital appreciation in a tourist hotspot and the use of the hotel room as an upmarket holiday home with all the trimmings of a first class hotel.

So if you’re considering a property investment, overseas or closer to home, could a buy to let hotel room be the right option for you? Well, here are five good reasons why it might be:

Buy to let hotel rooms can help reduce your exposure to risk

When you invest in a buy to let hotel room, your investment is less in the room but in the success of the hotel as a whole. Generally, buy to let suites and hotel rooms are pooled together so that you earn a percentage of the room rates across the hotel, not just on your own room. A single investment property may lie empty for months at a time, meaning lost revenues, but hotel rooms attract guests all year round.

Buy to let hotel rooms offer a low initial investment – and a decent return

When it comes to investing in any property, current markets can make it incredibly difficult to access the finance you need. These problems are only compounded when the property you want to invest in is overseas. When it comes to buying a hotel room, the developers and agents will likely have negotiated with a bank in advance to help prospective buyers along – the banks are often more willing to invest in the security of these types of developments run by experienced developers and management teams.

In fact, the current economic woes can actually be an advantage to investors who would like to buy hotel rooms. A buyers market often means help from the developer with fees and other out of pocket expenses. For example, a recent development in the Portuguese resort of Sesimbra is offering investment levels starting from as little as 3% - with the developer paying all closing fees (Around 10% of purchase price)and offering 7% cash back to investors who’s deposits are received before November 15th, 2008.

When you buy hotel rooms, you benefit from capital appreciation and a regular income

Like any buy to let property investment, buy to let hotel rooms offer both a regular income and the potential for capital growth. Unlike buying an individual property however, buying hotel rooms can provide an element of security. Whereas your property might lie vacant while you search for tenants or holidaymakers, high-end hotel rooms will always be popular with everything from overseas tourists to ‘locals’ on a weekend break. Hotel rooms also command a higher rate per night than traditional holiday lets or domestic buy to let options. That means returns in the region of 10% or more can be achieved at even 50% occupancy rates. How much would you earn if your buy to let property were vacant 26 weeks of the year?

When you buy hotel rooms, someone else manages all the day-to-day hassle

Perhaps the biggest attraction of buy to let hotel rooms is the fact that an experienced and professional team is in charge of everything from the finish and furnishings of the rooms to fixing the broken toilets. Buy to let owners will happily pay management companies a hefty percentage to look after the day to day needs of their properties – when you buy hotel rooms, that service is built in. Experienced management means existing contacts with travel agents and tour operators, it means tried and tested marketing methods and extensive marketing budgets. It also means as an investor you’ll never get a call from an irate neighbour or disgruntled tenant. If fact, it’s the perfect option for hands off investors who’d prefer to enjoy the benefits and leave the hard work to someone else.

When you buy hotel rooms you enjoy the benefits of a beautiful holiday home – if you need it

And perhaps the most enjoyable of those benefits is being able to access your buy to let hotel room for your own private use throughout the year. Whether it’s a short weekend break to escape the stresses of the working week or the annual family holiday, buying a hotel room delivers more tangible benefits than any savings account could.

And If you don’t require personal use of your room? Then buy to let hotel rooms are ideal for purchase via SIPPs - giving you tax-free capital growth and earnings.

Copyright 2008 © Owner Invest. All rights reserved