Residential or hotel property?

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After long years of patient labor, you’ve managed to save up a considerable sum of money, but what next? Of course, it would be a waste to spend it all on something you don’t really need, and many people invest their money to make it work and earn profit. Depending on your appetites and knowledge, you can invest in stock market – which is very risky – or safer real estate. If you are not willing to risk the result of your hard work, property is your best choice, but even here an investor has various options. If you’re Ok with having a piece of property in another country, you may want to invest in hotel market.

Why hotel property is better than residential

It is quite a standard move to buy an apartment to rent it out, especially if you live in a city with a growing population and high demand for rental housing. But this option has lots of disadvantages. The most common of them is that you have to look for your tenant all by yourself which is not that easy as it may seem. Besides, you never know what kind of tenant you’ll get. Another common problem is that renting out an apartment doesn’t really bring you lots of money because everyone is trying to find a cheaper place and you have to adapt to the prices on the market. So what are the advantages of hotel property?

  1. Cost. First of all, the prices for apartments and hotel rooms are not so different. Of course, it depends on the city in question, its district, price pier and other factors. But on the whole, overpaying a little bit may be pretty much worth it.
  2. Short rent. The general rule is the following: longer rental period means lower charges. Unlike apartments, a hotel room is rented out for a very short period – several days usually. Not only does it pay you more money, but guarantees the inflow of guests – when the room is cleared, another tenant moves in, and so on. Besides, many guests are ready to spend extra money for the comfort when they’re on a trip or vacation.
  3. No management problem. This one is crucial for those who don’t have time to manage their property. An apartment requires your constant attention while a hotel room – although it belongs to you – is managed by the hotel’s operator. The managing company does all the work, while you get your residual income.
  4. Professional management. At the same time, it is worth noting that an apartment owner may have no idea how to properly attract tenants, follow the market trends and so on. Hotel operator is a team of professionals who know exactly how to make money on hotel industry. Probably, this is the most important advantage of owning a hotel room.
  5. Flexibility. Another important detail is that hotels are more flexible than residential or traditional commercial property such as shops, offices and warehouses. Any hotel can quickly switch to another clientage should it lose some part of its regular customers. The managers have plenty of ways to attract new guests from other countries or towns. It can also substantially reduce its spending by leveling down wages or downsizing the staff.

Location is the key to success

But it isn’t that simple as it may seem. Buying just any hotel room won’t do good. Everything depends on the location of your property. Nowadays you may want to invest in European or US markets, although finding a cheap object here may be a problem. Some Asian markets have great potential. Gulf countries are growing more popular as a tourist destination as well, with Dubai’s (UAE) hotel and tourism industry performing better than any other city in the region.

If you evaluate your options carefully and analyze the market properly, you will find a number of realistic and promising investment decisions

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