Sounds like a good idea right? No management, great returns, hands-off passive income… but is investing in hotel apartments a good idea?
Let’s look at 3 reasons why hotel apartments are really really bad investments (Well at least according to me).
After you’ve bought the property you hand it over to somebody else to manage and they control how much it’s rented for and when it’s rented you have no control over the type of rental model maybe you can’t change it from residential to business or from business to residential. You’re stuck with it and you’re stuck with it for a long time.
There’s not much you can do to change that.
So you’re losing control and success in real estate is all about having control and being able to change things when the market changes because no market stays the same forever. (I wish it did but it doesn’t). So less
A Non-Existent Secondary Market.
Now there is a time to sell your investments even if you’re a long-term investor. And when that time comes who is out there to buy this kind of hotel apartment? Specially if it hasn’t performed as well as they said it would. You’re going to have a tough time selling that so you might end up being stuck with that property.
I think is the most important one is that there are better investment options out there. Look even if you’re thinking of buying a hotel apartment because you think it’s a completely hands-off investment you’re going to be at the whim of somebody else which is not good.
There are better investments that you can do where maybe it’s not 100% hands off like the hotel apartment but guess what? I wouldn’t recommend that you have that. You need to house some control so that you actually understand and you can actually work out and control what’s happening to your investment as it goes through.