Investments with international hotels
‘Safe investments’ is a phrase that many of us treat with scepticism and in truth there is nothing that is 100% safe these days, but that doesn’t mean that there are no good investments. Most investment suffer from a certain degree of volatility so should be viewed over the medium to long term rather than as a quick fix. Of course, some investments naturally carry more risk and are more prone to volatility than others and in return investors usually get a higher return to compensate for this higher risk.
Shrewd long-term investments are ones that build for your future and the choices that people make has altered little other the last century with gold, property and certain stocks and shares often being the investments of choice. Shares are not as stable as they were a decade ago even though many stock markets are performing admirably at the moment. Investments in mutual funds rather than individual shares certainly reduces investors risk and exposure to the potential failings of one company. However, they are not viewed as tangible investments.
Gold and property are tangible however. They can be physically touched and this appeals to investors as they feel it gives more security. Both these classes of investment have historically performed well over the long term so will always be popular. Property offers more in the fact that there is a high likelihood of capital growth and gaining an income so serves dual purposes. Realistically, gold has no potential to generate an income.
So long as you invest in the right property, in the right location and at the right price your chances of success are high although this is not guaranteed. Most problems that are associated with tenants; either they can’t be found in the first place or they become known as ‘nuisance tenants’ in the way they fail to pay their rent or fail to look after the property. This puts many investors off although the problems can be reduced by using the services of a management company. This does eat into your ROI so should be considered carefully.
The problems with tenants and the lack of guarantees where rent is concerned is probably one of the reason that we have witnessed a sharp increase in the number of rental guarantee concepts that are starting to crop up. It is a principle is very easy but can work well for all parties so long as there is sufficient cashflow and no one gets too greedy. Choosing well established developers who have been operating similar schemes for a long time is always advisable.
Of course, you could go one step further and invest in a rental guarantee concept that has the backing of a major, international 5-star hotel. The level of security offered is obviously fantastic thanks to the level of financial backing plus the hotels will have natural appeal because of their brand. These hotels are always in prime locations in thriving resorts so this again goes in your favour and greatly increases you chances of gaining capital growth.
There are three such projects of note here in Thailand. The first is in a project that is completed in an Amari hotel in the popular resort of Pattaya. The guaranteed returns in this rental guarantee concept are 5% p.a. for five years followed by projected returns of 8% p.a. in subsequent years. This is a very reasonable return for such as secure investment.
The next two rental guarantee concepts are on the island of Phuket in the south of Thailand. Both hotels are still in the construction phase and therefore offer greater incentives. The guaranteed return is 7% p.a. for five years and projected returns of over 10% in following years in both the Ramada and Best Western hotels. Again, this is a very attractive and healthy secure investment backed by major 5-star hotels.