When we talk about property investment, we always discuss purchasing full properties and renting them out either ourselves or through an agent, but what about hotel room investment?
Many may have never thought about this before but this new era of investment is actually pretty sound and with short investment periods and attractive ROI’s, it’s certainly worth considering.
Many independent companies are deciding to take their money away from the banks and give individual investors the opportunity to help fund individual or wider company hotel builds. This may seem like a new concept but for some, it is working tremendously well.
Hotel room investment gives investors the opportunities to buy into a high-yielding industry at a fraction of the cost and without the management and time consumption running your own hotel would. The company would manage all the day-to-day runnings of the hotel, you literally don’t get involved in any of it and each month or year, you see a nice return on your investment.
The price you pay for a hotel room is pretty similar to that of an apartment, depending on the city, hotel and room size.
The hotel industry is one which shows no signs of slowing down and for good reason. People in the UK are looking for holidays closer to home and enjoy weekend breaks more than ever before. Hotel companies have built upon this and are offering incredible hotels at reasonable prices.
In major cities such as Manchester, Birmingham, Liverpool and Leeds, you’ll struggle to find a hotel on the weekends and even during mid-week and this emphasises the high demand which these hotels are facing.
Investing in hotel rooms couldn’t be easier;
– Do your research around the town or city you want to invest
– Select the hotel
– Buy the hotel room
– Receive income (usually 8% with yearly increases)
– Retain the opportunity for the hotel to buy back the room later on
As with all investments, researching the right hotel for your money is key.
If you can, not only look at the figures the hotel are giving you, but look online, read their TripAdvisior reviews, check out their Facebook page and spend a night in the hotel. This will give you a good idea of their customer service, management and how popular the hotel is.
The busier the hotel, the more returns you may see your account.
Hotel room investment usually offers an 8% ROI with an increase of 1% every 3 years or so, but this does vary depending on the hotel, location and company.
Many hotels will retain the right to buy back the room between years 3-10 but do so with a decent percentage of the original cost.
This is absolutely fine because if the investment has worked well for you and you’re impressed with the returns, reinvest in another hotel room if available.
Investing in a hotel room is a hands-off investment which will give you some great returns but as always do your own homework first and see the money coming in.