Firstly I’d like to appologise if I’ve stuck this message in the wrong forum…
Was on the east coast this weekend and looking at investments in newly renovated hotel suites. The rooms have ocean views and are in a popular location. The hotel is marketed mainly at Japanese tourists, and the area is planned for siginificant infrastructure expansion in the next 2 years.
The income is pooled, and they are offering a guarantee of x% for two years, after which it switches to market rate, or you can choose to reject the guaranteed rate and go straight for the market rate.
I have previously only invested in single dwellings on the west coast, and feel a bit like a fish out of water at the moment. I’d like some advice on the questions I need to be asking and what more research I need to do before I go ahead with this.
Thanks, and sorry if I seem a bit vague… [blush2][confused2]JJ
I haven’t ever heard a good report about hotel suite investments. A few things to consider:
1. If they are smaller than 50sq/m Banks won’t lend on them.
2. High management/maintenance fees for cleaners, pools, elevators etc. Look very carefully at this.
3. limited possibility for cap growth apparently (don’t know why).
4. Management company of can change abruptly.
5. Rental guarantees are provided by management, but it is not guaranteed against anything – quite often a $2 shelf company, They go broke and you are out of income.Get a copy of the financial report for the complex to see what the management fees/running costs are and the rental income etc.
Do a background check on the management company; not the owners of the building.Look at past re-sale records to check cap growth.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
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