Global Travel Group: 100% morgage 3 year guaranteed rent

Does anyone know anything about global travel group. I am considering investing with them and I am doing some research into them. Any insight would be useful, thank you.

Regards
elearning

Re: 100% morgage 3 year gaurenteed rent

Assuming its the same people, the only Global Travel Group I know of is a UK-based franchise travel agency operation. They were doing reasonably well but presumably like all travel companies they are feeling the squeeze as we all book our holidays on the net.

If they are now moving into overseas property, or if one of their franchisees is having a go at it, it is a new departure in my experience and certainly I am not aware of their having a track record in the business.

If they are offering something with a 3 year guaranteed rental and a 100% guaranteed mortgage tied in to it, I would be very very careful before going down that road. A significant amount of "guaranteed rental" in the non-commercial sector in overseas markets is a marketing ploy that is quite simply aimed at mugs who don't do their research.

Of course if you do the due dilligence and find that there really is a rental customer with a signed 3-year contract, and that there is a strong possibility that the contract will be renewed at the end of the 3-year term, then how can you lose? If however you simply take a salesman's word on this, you deserve to be caught!

In essence, it is unlikely that this one stands up, but you never know.

Re: 100% morgage 3 year gaurenteed rent

The apartment is situated in Fanarbe in Tenerife. I have checked and this is a very good area of Tenerfie. It is an apartment in a hotel that this group bought out completely. They will be the management company of this Hotel also. According to this group they already bought two other Hotels in the same area and used this same model. They contract is now up and they are renewing it. That is according to them. The hotel featured in overseas property show recently.

You talk about due diligance. Can you give me some guide lines on this. what should I be asking, looking out for etc.

Regards and Thanks
elearning

Re: 100% morgage 3 year gaurenteed rent

Hi Elearning,

The first bit of due diligence I would do on this is to compare the price of the apartment to the others in the area to see whether you are paying over the odds. Don't do this by comparing the total price, but the price per square metre (or per square foot) so that you can compare like for like. Most developers factor in a guaranteed rental to the price of the property, so you are effectively paying for it yourself.

I'm not sure if this is a lifestyle or investment property, or how long you intend to keep the investment, but if you need to have an exit strategy if you an investor and know how you are going to sell it. If you are planning to sell at the end of three years I can bet a lot of other people will be thinking the same if this is a big development so that there could a lot of apartments on the market at the same time, which could adversley affect the price. Make sure you know you are going to sell it to and that there is demand for the property. If you're planning on renting it out similar check out the local rents, yields, voide periods etc.

A good bit of due diligence involves checking everything the developer has told you, everything, do not take anything they say for granted.

With regard to the finance do your due diligence on this too. It is common for developers to be connected to the finance companies in some way and receive incentives for referring people to them. Check the prices and see if you can find a cheaper way of financing this investment.

Also, do you know the management cost? These can often be hefty so get them checked out.

Location is obviously key here so visit it and make sure it is in a location. If it was a former hotel so it would be interesting to see why the hotel failed, especially if you are unsure of the location. So when you're there see if you can speak to some of the locals about it, you can often find out valuable information this way.

It goes with out saying that you should speak to an accountant for tax advice and hire a reputable local lawyer.

Good luck,

Simon

Re: 100% morgage 3 year guaranteed rent

If you are buying an apartment in a hotel, you need to have a lawyer check the fine print for a number of issues:

Exit strategy. Do you have to offer the apartment to the Hotel first at a lower price than market value? Sometimes there is a clause that forces you to sell to the hotel at "market value", but how this value is calculated is important.

Common costs: How are these calculated in the event that you want to retain the apartment for your own use? If they are based on the running costs of the hotel, including staff etc, you could be in for a bit of a shock.

The best bit of advice about buying a hotel room is to tread very carefully, and look at every possible angle.

Of course the apartment should be at a lower price than comparable local units, because of the restrictions on use.

Re: 100% morgage 3 year guaranteed rent

Ask how much they would be willing to sell the property without the 'guaranteed' rental. The answer could be revealing.

Please read the posts about 'guaranteed' income. They are normally a scam, and not they are not worth the paper they are written on.