Investing in hotel rooms?

Return looks to be about 5.7%. Bear in mind it is completely hands off so you cannot add value so the selling price will just be a function of the rent and should only rise with CPI.

I had one in Perth for a few years as the return was respectable and I was spending lots of time away so it suited at the time. I made some money when I sold but only as the interest rates had come down and people were accepting lower yields.

I wouldn't do it again as I now like to value add, but at the time it filled a niche. They do get a lot of bad press and when the 5 year lease on mine came up the operator produced a clause to show that he could lower the rent as he wasn't making money. (...according to him. Why would you want to extend if things were so bad?)

..just though I would add a bit of balance.
 
...also I knew some who had bought in my complex as the owners were allowed so many free nights a year in the hotel which was handy for country folks who only came into Perth to catch up with friends and family.

This would be different in every property. I looked at buying (but didn't) one of the units at Bunker Bay a few hours south of Perth. When the resort first went in they were offering 15 free weekends a year! No idea if that is still going though.
 
My old man had a holiday unit in Merimbula (bit different I know). But he was getting lousy returns and then got wind of a Dogey manager.
So some friends were heading up and dad asked them to request his unit but not tell the manager they knew my dad.

Anyway after they left my dad called and asked if his unit had been tenanted to which he got told NO. Turns out the manager was doing this often, people would stay and he would simply not tell the owners and pocket the money.

I am not saying this is the norm but it can probably be done on a much grander scale in a hotel as well.
 
Hello,

I would stay away for the following reasons:
1) Future resale is limited
2) Hard to obtain finance
3) If the hotelier went bankrupt what would happen to your investment.
4) If the tenant was not paying the rent what would you do?

The one that makes the money is the hotel owners :)
 
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