Tips for those keen on investing in hotels

It’s not common for most beginning investors to immediately think of hotels as avenues for expanding their investment portfolios. But the hospitality industry is, in many ways, one of the depositories of your hard-earned money, outside the standard bonds and stocks. Below are some key tips for beginning investors in the sector:

Firstly, be mindful of the location of the hotel. Modern investors need not limit themselves to hotels closer to home as online access has made it easy to invest in hotels in booming cities worldwide. However, they should always consider the amount of capital they are willing to commit. Know that while it’s not that complicated to pour in a good amount of money, don’t just shell out everything even if the market has proven to be lucrative; ask about the minimum investment capital and stick by it at the beginning.

Also remember that generating good annual returns is the point of investing, so make a good estimation of the average returns you are expecting to gain from your first investment tranche. The great thing about hotel investments is that returns on a yearly basis almost always exceed five percent. This, in fact, is the main disincentive for leaving your money dormant in your bank and instead putting it in hotels.

Assuming you’re dead-set on investing in the hospitality industry, find ways to secure a good loan from a bank. You can complement this by directly talking to the hotel developer regarding your need for financial backing. Assuming you’re qualified, the reason you should partner this with a bank visit is to hopefully acquire an interest-free loan.

Tyler Tysdal is the Managing Partner of Platte Management, a single-family office with active investment strategies in private equity and real estate. He specializes in the hotel market and hospitality industry in the New York and Seattle market. Visit this page for related posts.

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