In a post-war era, room investment in a hotel is not a new concept. It is now a growing investment sector in a lot of countries, especially in the UK which provides an alternative to the buy-to-let property with a continuous stream of limited occupants. Many of the investors, especially from America, purchase the luxurious rooms in the hotels of Europe with a surety that they are available when holidaying on the continent.
Nowadays, this trend has shifted towards pseudo timeshare arrangement. It is now more accessible to large number of people than it was in the past. Most importantly, it’s not only the wealthy people who invest in hotel rooms. Even the ordinary people like you and me take the advantage of these life-changing opportunities by investing their money in the right direction and at the right time. But what is the reason why so many are picking a room investment in a hotel? Let’s find out below:
It is one of the very few businesses where the chances of losing your money are quite low. When you are putting resources into an all-around perceived brand, you cannot discern any reason why it wouldn’t be a generally safe speculation.
No mortgage and low cash demands
Compared to buy-to-let property investment, hotel room investment is cheaper. It requires a low capital outlay than a house or flat. Most financial specialists who do put resources into a buy-to-let property will either require profound pockets or a home loan to subsidize most of the speculation. As of August 2016 by the Nationwide Index, the average house price in the UK was around £206,145 whereas the entire hotel investment started at £60,000. Definitely a good business in the UK!
Hotel investment becomes accessible to the masses when rich people invest their money into this business. All the large investment companies and smart global funds are enhancing their vulnerability to hotels and sometimes hotel investment funds are also available. Especially the private investors like to keep control of their money and so they prefer to buy the rooms instead of buying a hotel.
Guaranteed rental yield and buyback
Guaranteed rental yield and buyback removes another layer of risk from the investment. Rental yield makes an easy task to calculate return on investment whereas buy back stipulates that the management administration will purchase back your room after a given period for a contracted sum.
No admin required
It is an uncomplicated process as it does not need any admin nor it has any maintenance requirements. In addition, they don’t have any cost deductions to figure out nor have any tax rules to apply. It is also exempted from stamp duty. Perhaps, it is so straightforward than a normal individual can undoubtedly comprehend it.
It starts to show the results soon after you put the resources in a hotel room. Rental yield will make you earn the money quickly. Dissimilar to different speculations where the property may require overhauling, a lodging venture is generally prepared to go when the offer comes to showcase.
As the buy-to-let property investment is getting outdated in the UK, this hotel room investment is taking investors by storm. Now, several investors are diversifying their portfolio into this business due to the tax relief and exemption from stamp duty. I hope this comes out to be the rightful alternative to UK future property investment.