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In the July 2008 Issue of Property Investor News
Apart-Hotels
Most people, especially property investors, will have at least heard about the hotel apartment concept, or buy-to-let hotel room, by now. Guest Invest was one of the first companies in the UK to promote the scheme in various locations around central London. It allowed people to invest both in the hotel industry and the London property market, to use the hotel room for a certain amount of days (52) a year, and get a 50% share of the income gained from renting the room on a daily basis to tourists or business travellers. Aside from the return-on-investment (ROI), the other main benefits for the investor include the fact that the management, maintenance and marketing aspects are all taken care of. The investment can also be put into a self-invested personal pension (SIPP) because it is a commercial lease and investors can currently obtain 75% LTV mortgages at rates of 1-2% over LIBOR, so a 6% net return should cover the mortgage costs.
So far so good, for the property investors who jumped into the unknown some four years ago according to Guest Invest, which uses the phrase "earn money while others sleep" to promote its product - called the "buy-to-let hotel room". The company is now selling rooms at its fifth hotel in London and claims that the original room owners are achieving net rental yields of 8% and that the price of an average room at Guesthouse West in Notting Hill increased from £235,000 in 2004 to £275,000 in 2007. Just over one-third of the original investors have now sold their hotel rooms, but one-quarter have re-purchased another hotel room through the company, which would suggest that many are satisfied with the investment concept.
However, while it is a relatively new idea in the UK, it has been around for some time in the US where the hotel sector in general has now become an established commercial property investment category.
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