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Why You Should Consider Investing in Hotel Rooms

Written by Posted On Tuesday, 23 July 2019 23:51
Why You Should Consider Investing in Hotel Rooms

When you hear the term “property investment”, you may automatically think of a house or an apartment. The real estate investor, Adam Hochfelder indicates that there are other lucrative options of property investment accessible. One of these options, that is growing in popularity is that of hotel rooms.

Houses and flats are considered as long-term investments. Nevertheless, the real estate market can fluctuate and even collapse. For that reason, short-term investors are moving into the world of hotels.

Hotel room investment

As claimed by Hochfelder, buying a hotel room is similar to the buy-to-let strategy, but with much shorter-term tenants.

The greater advantage of hotel room investing is that the hotel management team advertises and fills the room, takes care of the booking, collects the fee and cleans the room. This is because the room is part of the hotel and all of the above mentioned is specified in the contract and there are no extra hidden fees to pay.

So, they do all the work that is required and then pay you the money that you are owed.

As a hotel room investor, you will receive a guaranteed income of around 8% of the earnings on a monthly basis.

According to Hochfelder, the managing director of Merchant Hospitality, the greater part of the hotel room investments last for around five years. You can sell the room back to the hotel management team with capital growth of up to 15 percent at the end of the agreed term. But, you are unlikely to get back the full amount of your investment, if you decide to sell it before the end of the agreed term.

As it is up to the hotel management to make sure that they advertise and fill the room, investing in a hotel room could be one of the easiest ways to earn a profit.

Hotel investment benefits

The cost is the greatest benefit of investing in a hotel room over a house or an apartment. You make a lower point of entry, a cash purchase that is the equivalent of the deposit you would pay on a property.

You are kept stress-free, as the management team takes care of the day-to-day running of the hotel room. At the end of the month you can enjoy a yield that is often higher than that of many properties. All these aspects make hotel rooms investment an easy investment from a work point of view.

The investors can motivate the hotel management team with bonus payments to make sure the room is occupied as often as possible.

Another important benefit shared by the experienced real estate investor, Hochfelder is that you do not need to worry about how long it will take to sell the room or how much you will get for it, when your investment term nears its end. Your contract guarantees you a 15 capital growth as the hotel management company will be buying it back from you. Unlike other buy-to-let properties, you can put your hotel room into a self-invested personal pension, as it is considered a commercial investment. This can provide a nice little nest egg for the future, making all income and growth tax-free.

In Hochfelder’s opinion, this is a fantastic way to get a short-term, hands-free investment that offers guaranteed returns.

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Thomas Evans

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