investing in hotel rooms

[galway_blow_in]

its a relatively new form of property investment , you buy as many rooms as you wish , then rent them to the company who manage the hotel , you receive a fixed rent per anum

anyone any views on the subject

 

[Bronte]

Any chance you might tell us what on earth it is you are talking about so that we might formulate an opinion?

Is this another get rich quick scheme.

 

[galway_blow_in]

Any chance you might tell us what on earth it is you are talking about so that we might formulate an opinion?

Is this another get rich quick scheme.

I outlined exactly what im referring to , its not my job to educate you about the basics of a particular form of investment , do your own research , this thread is aimed at those who are familiar with this type of investment

 

[Bronte]

Thanks for the education galway. I'm sure there are loads of posters familiar with this type of investment. Sounds remarkable like that Spanish wheeze of time shares, or it's latest incarnation about 10 years ago, Bulgarian apartments with guaranteed rent...

Why don't you just buy the hotel. Is it in Ireland or Honolulu.

I once had the misfortune of having a poster screaming at me on here because I told him he was mad to invest in the moving sands of Dubai.

 

[Joe_90]

I outlined exactly what im referring to , its not my job to educate you about the basics of a particular form of investment , do your own research , this thread is aimed at those who are familiar with this type of investment

For someone looking for other people help that's not a very good way of going about it.

Perhaps you could elaborate of the structure. I'm familiar with a structure where a group of people buy an entire hotel and share the rent in proportion. I'm familiar with a structure where people buy individual rooms which are let to a management company who pay them a rent.

 

[Brendan Burgess]

Hi GBI

There have been many cases of people getting badly burnt by these investments. Wasn't there a big row between the receiver of some hotel and those who owned the rooms. The owners could not access the rooms or the rent.

Update: here it is:

Ritz-Carlton granted trespass order in feud over luxury suite


As the owner of a room, you have very little control.

I would imagine that it would be very difficult to sell the room when you want to cash in your investment.

A few people have told me that they have invested in hotel rooms. None seemed to be too happy with their investment.

Brendan

 

[galway_blow_in]

Thanks for the education galway. I'm sure there are loads of posters familiar with this type of investment. Sounds remarkable like that Spanish wheeze of time shares, or it's latest incarnation about 10 years ago, Bulgarian apartments with guaranteed rent...

Why don't you just buy the hotel. Is it in Ireland or Honolulu.

I once had the misfortune of having a poster screaming at me on here because I told him he was mad to invest in the moving sands of Dubai.

when someone trots out the banal " is this another get rich quick " line , I tend to have little time for there input , your high handed tone further added to the undesirable nature of the post

 

[galway_blow_in]

For someone looking for other people help that's not a very good way of going about it.

Perhaps you could elaborate of the structure. I'm familiar with a structure where a group of people buy an entire hotel and share the rent in proportion. I'm familiar with a structure where people buy individual rooms which are let to a management company who pay them a rent.

posters tone was arrogant , sarcastic and obnoxious

yet he knows nothing about this kind of investment , im not hoping or planning to buy a hotel room , ive just read about them on and off and wondered how folks viewed them

 

[galway_blow_in]

Hi GBI

There have been many cases of people getting badly burnt by these investments. Wasn't there a big row between the receiver of some hotel and those who owned the rooms. The owners could not access the rooms or the rent.

Update: here it is:

Ritz-Carlton granted trespass order in feud over luxury suite


As the owner of a room, you have very little control.

I would imagine that it would be very difficult to sell the room when you want to cash in your investment.

Brendan

thanks Brendan , while the idea seems interesting and easy in terms of management due to the fact that a company manages the property , I can see how an investor might find themselves at the mercy of more powerful interests should major changes come about like a new company taking over etc

they would need to be attractively priced considering the risks your point out

 

[Bronte]

posters tone was arrogant , sarcastic and obnoxious

yet he knows nothing about this kind of investment , im not hoping or planning to buy a hotel room , ive just read about them on and off and wondered how folks viewed them

I agree I was slightly sarcastic, because you told us diddle squat about the investment/ scheme/ investment.

Things like

Who
Cost
Location
How much
Rent amounts
Percentage return 'promised'
Taxes

So apologies if you feel I was obnoxious and arrogant. Come on, you have 50 posts, details are needed.

Anyway one would assume trivia such as actual details might alert other people to this, deal, hence your bare bones post.

 

[Fella]

I don't know the full details but i would expect a high return as to me it's high risk.

I would favour a REIT for a part ownership of property with rental returns, i have only recently been looking at REIT's , owning one room I could see lots of potential problems compared to having a small ownership in multiple rental properties that a REIT would offer.

I never heard of this type of thing before though but it's interesting anyway.

 

[galway_blow_in]

I don't know the full details but i would expect a high return as to me it's high risk.

I would favour a REIT for a part ownership of property with rental returns, i have only recently been looking at REIT's , owning one room I could see lots of potential problems compared to having a small ownership in multiple rental properties that a REIT would offer.

I never heard of this type of thing before though but it's interesting anyway.

REIT,s are a conservative way to invest in property and for those who want a low risk investment , they are a great idea , yields are rarely above 5% however and usually less , the two main irish ones , Hibernia and green , pay a good bit less than 5%

I would not invest in them as im looking for higher income

 

[facetious]

I think Redbarn near Youghal was that type of investment you are probably talking about.

 

[PMU]

You would be investing in an illiquid unregulated product. Who will buy your hotel room when you want to sell, what is the average waiting time for sales? Who will set the price, as there is no open market for hotel rooms? How much do you have to pay for maintenance charges on the hotel? How much do you have to pay for cleaning and maintenance / redecoration charges on your room? What is the situation regarding insurance and what does it cover, i.e. damage to your hotel room only or a share of damage to the hotel? Does the hotel let rooms on a strict rotation basis so all stand a good chance of being let, or do you have to bribe the reservation staff to let your room? Can you use the room yourself for free in slack periods?

Why invest in a physical hotel room why you can buy liquid dividend-paying shares in any of the major hotel chains?

 

[galway_blow_in]

I think Redbarn near Youghal was that type of investment you are probably talking about.

few maldron hotel suites for sale online right now in limerick and Dublin , there the kind im referring to

 

[galway_blow_in]

You would be investing in an illiquid unregulated product. Who will buy your hotel room when you want to sell, what is the average waiting time for sales? Who will set the price, as there is no open market for hotel rooms? How much do you have to pay for maintenance charges on the hotel? How much do you have to pay for cleaning and maintenance / redecoration charges on your room? What is the situation regarding insurance and what does it cover, i.e. damage to your hotel room only or a share of damage to the hotel? Does the hotel let rooms on a strict rotation basis so all stand a good chance of being let, or do you have to bribe the reservation staff to let your room? Can you use the room yourself for free in slack periods?

Why invest in a physical hotel room why you can buy liquid dividend-paying shares in any of the major hotel chains?

I agree but the yields on hotel stocks like marrion etc are far lower than when you buy the hotel room outright

 

[galway_blow_in]

I agree but the yields on hotel stocks like marrion etc are far lower than when you buy the hotel room outright

sorry , I meant marriott international

 

[Brendan Burgess]

Diarmaid Condon has a good article on the concept:

http://www.diarmaidcondon.com/how-safe-are-hotel-room-investments/

 

[sunnydonkey]

They could be ok with a big international hotel chain. In theory its a win win for both the hotel and the investor.

However you have very little leverage over the chain if they start to act tough with their investors and the investment itself is very illiquid. Check the contract carefully regarding the hotels possibility to add management fees, costs or to alter rates, and assume that these events will happen. Because of the illiquidity and risk I wouldnt consider it a suitable investment for anything other than a small part of your assets.

I would avoid smaller hotel chains and individual hotels and anything that smells of timeshare/fractional ownership etc.

 

[Bronte]

REIT,s are a conservative way to invest in property and for those who want a low risk investment , they are a great idea , yields are rarely above 5% however and usually less , the two main irish ones , Hibernia and green , pay a good bit less than 5%

I would not invest in them as im looking for higher income

So you are looking at risky investments if you want more than 5% return.

One of the sectors that really lost out in Irealnd after the bust was hotels who had borrowed way too much and plenty of them ended up in Nama and many have now been sold off cheap.