There are plenty of options when it comes to property purchase and investment but in today’s market there is one option that is holding its own – buy to let hotel rooms.
Hotel and resort developers offer individual investors the chance to buy hotel rooms within high-end resort developments. The investor will benefit from the annual income from room rentals, benefit from capital growth and can use their room typically for up to 30 days a year.
If you are considering a property investment a buy to let hotel room could be the right option for you. Here are five reasons why:-
1. Buy to let hotel rooms reduce your exposure to risk
When you invest in a buy to let hotel room, the return on your investment is based less on the room but in the success of the hotel as a whole. Generally, buy to let suites and hotel rooms are pooled together so that you earn a percentage of the room rates across the hotel, not just on your own room. A single investment property may lie empty for months at a time, meaning lost revenues, but hotel rooms attract guests all year round.
2. Buy to let hotel rooms offer a low initial investment – and a high return
When it comes to investing in any property, current markets can make it incredibly difficult to access the finance you need. These problems are only compounded when the property you want to invest in is overseas. When it comes to buying a hotel room, the developers and agents will likely have negotiated with a bank in advance to help prospective buyers along – the banks are often more willing to invest in the security of these types of developments run by experienced developers and management teams.
Indeed, the current troubles in the housing markets can actually be an advantage to savvy investors considering whether or not to buy hotel rooms. A buyers market often means help from the developer with fees and other out of pocket expenses. ROC Investments offer the opportunity to purchase buy to let hotel rooms with 100% finance available.
3. When you buy hotel rooms, you benefit from capital appreciation and a regular income
Like any buy to let property investment, buy to let hotel rooms offer both a regular income and the potential for capital growth. Unlike buying a single, one-off property, buying hotel rooms can generally provide a greater degree of security. Whereas your property might lie vacant while you search for tenants or holidaymakers, high-end hotel rooms will always be popular with everything from overseas tourists to ‘locals’ on a weekend break. Traditionally, high-end hotel rooms will also generate a higher rental per night than stand-alone holiday lets or buy to let options. That means returns in the region of 10% or more can be achieved at even 50% occupancy. How much would you earn if your buy to let property were vacant 26 weeks of the year?
4. When you buy hotel rooms, someone else manages all the day-to-day hassle
Perhaps the biggest attraction of buy to let hotel rooms is the fact that an experienced and professional team is in charge of everything from the finish and furnishings of the rooms to fixing the broken toilets. Buy to let owners will happily pay management companies a hefty percentage to look after the day to day needs of their properties – when you buy hotel rooms that service is built in.
Experienced hotel management means existing contacts with travel agents and tour operators, it means tried and tested marketing methods and extensive marketing budgets. It also means as an investor you’ll never get a call from an irate neighbour or disgruntled tenant. If fact, it’s the perfect option for hands off investors who’d prefer to enjoy the benefits and leave the hard work to someone else. ROC Investments work with some of the world’s largest and well respected hotel groups in the world such as Oasis Hotels, West Paces Hotels and Sol Melia.
5. Your investment can be tax efficient
Individuals can use pensions to purchase a buy to let hotel room using a Self Invested Personal Pension (SIPP) which can be highly tax efficient. Buy to let hotel rooms are permitted by HM Revenue & Customs (HMRC) to be held within a SIPP because the properties are classed as commercial property assets. HMRC stipulate that owners buying with a SIPP are not permitted to use their properties. Tax benefits of purchasing a buy to let hotel room with a SIPP are:-
- No Income Tax on rental income generated by your hotel room
- No Capital Gains Tax on the resale of your hotel room
- Any eligible contributions you make into your SIPP will attract tax relief at your highest rate of relief. Contributions will benefit from 20% tax relief at source – as soon as a contribution is made
More information: Contact ROC Investments about buy to let hotel rooms, by emailing invest@rocinvestments.co.uk or calling +44(0) 1902 722 930
Tags: buy to let hotel rooms, high end resorts, roc investments