How to guarantee your property investment income – the easy way

Hotel rooms are ideal investments for beginner investors

Property investment is an excellent way to create wealth and stunning retirement income. But for the first-time property investor, purchasing a buy-to-let property requires a big leap of faith. It’s the biggest investment you’ve made. Though leveraging is an effective strategy to grow a property portfolio, borrowing a large sum to invest could make you nervous.

It’s why hotel room investment is increasing in popularity. It offers the potential for capital growth and superb (guaranteed) income – everything property investors want, without the huge initial effort involved in finding and organising a buy to let investment. You can invest in a hotel room for less than the deposit on a buy-to-let property.

Below, we’ll discuss what makes hotel rooms so attractive, and why so many investors are investing in hotel rooms as an alternative to buy-to-let property.

Benefit from guaranteed property investment income

Investing in a hotel room is like combining investments in property and business simultaneously. As property investment opportunities, hotel room investments benefit from the potential for capital growth. As an investment in business, the investor benefits from guaranteed income. Yes, that’s right, I did say guaranteed.

If you invest in the right hotel, you could earn a solid 8% yield on your investment capital. Compare that to:

  • The average 6% gross yield on buy-to-let property
  • Around 3% income from dividends on stocks and shares, (in return for the higher risk)
  • Less than 1.5% in interest with your bank account

And here’s the thing: the best hotel room investments not only pay you great guaranteed income, but they also protect your investment with guaranteed capital growth.

Want hassle-free investment? Book into hotel rooms

Hotel room investment offers an alternative property investment that it is completely hassle free. It’s the ultimate set-and-forget investment.

When you invest in a hotel room, it’s the hotel management team that makes all the business decisions. They’ll drive occupancy. They are incentivised to produce results by the hotel owners: the bigger profit they make, the more they are paid.

In return for investing, you get guaranteed income and a fixed-term capital guarantee. Your exit strategy is already set. Typically, an investor might receive 8% per annum income on their investment and 15% growth in their capital after five years.

You invest, relax, take the income and capital profit. If only life were that straightforward all the time.

Other reasons to invest in hotels compared to buy-to-let

Apart from a lower cost of entry, guaranteed income, guaranteed capital growth, and being a hands-off investment, hotel room investment also has the following benefits:

  • No chasing tenants for rent
  • No maintenance, repairs, or tenant defaults
  • No need for a mortgage
  • Income paid regularly
  • It’s considered a business investment

This last point is very exciting because it allows you to invest tax efficiently in a Self-Invested Personal Pension (SIPP). You can’t put a buy-to-let property in such a scheme. Investing in a SIPP wrapper means that the income and capital gain will be tax-free.

How to invest in hotel rooms

With so many benefits, it’s little wonder that so many property investors are now adding hotel rooms to their portfolios. Smoe buy to let investors invest in hotel rooms to balance their portfolios and secure cash flow. The key to doing so successfully is to invest in a hotel that benefits from a great hotel management team.

Once you’ve found your hotel investment opportunity, investing couldn’t be easier. You pay your investment amount, and in return, you get a deed that confirms you own the hotel room and you go on the land registry.

The hotel industry is among the strongest economic sectors in the UK. Occupancy rates are at record levels and rising, as are room rates. Demand for hotel rooms is consistent throughout the UK.

For more information about hotel room investments and the hotel industry, read our investment guide discussing hotel room investment for investors who want yield. You might like to watch my video series introducing hotel room investment as a property investment strategy.

For information about our latest, hand-picked hotel room investment opportunities, contact one of our team today on +44 (0)207 923 6100 . Guaranteed income and capital growth could be a phone call or email away.

Live with Passion,

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.