A good night's Sleep for Investors
How the buy-to-let hotel room is helping investors sleep soundly at night.
With ever-increasing working hours and the day-to-day demands of family and friends, many property investors are finding that they have less and less time to manage their investment portfolios. For those with a busy life, the hassle free investment option to own a hotel room may just be the solution.
The idea is surprisingly simple: you buy a hotel room on a 999-year lease and then let the hotel management run it as a commercial venture on your behalf. Your room is let out to paying guests and you share the revenue 50:50 with the hotel. As an added bonus, you or your friends can stay in your room free of charge for 52 nights of the year.
GuestInvest, the UK’s leading buy-to-let hotel company, introduced the concept to the UK in 2004 with their first hotel in Notting Hill, Guesthouse West. Flooded with thousands of enquiries about the innovative hotel buy-to-let concept, GuestInvest soon realised that they had started a property revolution. Within a matter of weeks all of Guesthouse West’s luxury buy-to-let hotel rooms had sold out at an average purchase price of £235,000.
As the hotel approaches its third birthday and the hotel room asset class starts to come of age, room owners could be forgiven for celebrating a little early with the news that returns for the last quarter averaged a record 7.63%.
James Dubois, a chartered accountant and room owner at Guesthouse West in Notting Hill and Nest in Bayswater, has not been surprised by its success. He says that it is the simplicity of the investment that is most attractive: “What I love about this investment is that it is fully managed, so there is no annoyance or any of the aggravation that I experience with my other properties.”
For those who do not use their rooms, such as Elkan Abrahamson, returns have been even greater. Elkan, who purchased a room through his SIPP, received a return of 8.38% in last quarter. He puts it down to the success of GuestInvest’s management team who have maintained occupancy levels of over 80% increasing the room rate from £99 at launch to the current rate of £150. The returns are also indicative of the strength of the London hotel market. A recent report by KPMG confirmed that London had claimed the top spot in Europe for both occupancy rates and revenue per available room which had grown by 18%.
For those who have decided to sell on their rooms, the news has also been good. Rooms have been sold quickly and profitably with capital appreciation averaging 14.18%.
Following the success of Guesthouse West, GuestInvest added a second hotel to its portfolio, a 157-room Grade II listed hotel in the Bayswater Conservation Area called Nest, where 95% of the rooms have already been sold.
Richard Banks, a Risk Manager and GuestInvest investor, decided to buy a hotel room at the Nest hotel because he was attracted by the idea of having someone else take all the hassle out of property management.
“I considered becoming a portfolio landlord, but didn’t have the time to search for the right properties. I also didn’t want the inconvenience of dripping taps and broken boilers, or having to deal with a number of letting agents.”
With Nest now sold out, GuestInvest recently added another hotel to their group. It will be called The Chiswell Street Hotel and will be built on the historic site of the Whitbread Brewery, in the heart of the City of London. Rooms recently went on sale there and ten were sold within the first hour.
The undoubted appeal and success of the buy-to-let hotel room is the simplicity of the investment. Everything is completely managed for you: you don’t have to worry about tenants as the hotel fully manages the letting to hotel guests; the hotel is maintained in immaculate condition; and as a Central London hotel, the market has never been stronger and is projected to grow for the foreseeable future. This growth underpins your quarterly returns and the capital value of your investment. The end result seems to be a good night’s sleep for all.
If you are looking for an investment you won’t lose sleep over, you might just want to check out buying a hotel room.
For more information:
GuestInvest 020 7747 6880
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