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hotel room investing

In summary

In detail

The market conditions provide the right recipe to make this asset backed investment attractive for medium to high yield investment hunters. The market has buy to let hotel rooms significantly matured since the pioneers of buy to let hotel rooms, being subject to heavier regulation and blue chip operators underpinning the investment schemes they make for a more robust investment product providing attractive returns.

Land prices are low which means that developers seeking to raise capital on the private markets are able to ‘share’ more of their capital with equity investors. Typically yields are between 6 & 12 % and comparably low base rate means low current accounts and ISA savings accounts.

There are fewer branded hotels being built, although one should be careful to make sure that there is a strong demand for a hotel in their prospective investment area before choosing a development to invest in.

There are fewer lenders supporting strong development propositions meaning more opportunity for individuals to get in at ground level in to blue chip hotel chains. In our opinion Investor success in the hotel market is looking to invest in hotels that are underpinned by an established brand operator as they always carry out thorough research before their investment in to a site, providing greater security.

Early stage Investment i.e. investment in a fund that takes it through the development stage will provide the strongest yields however it is important that you are thorough at the investigation stage making sure you fully investigate the professional expertise of the company that is operating the scheme.

There are two approved methods of BTL Hotel room schemes, the unregulated approved and regulated approved collective investment scheme. There are companies who run schemes that are subject to regulation when they are not authorised to operate such a scheme. If you find that you have invested in such a scheme your money and the organisation is at significant risk as the FSA have the power to shut down these schemes pushing the companies in to administration.


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