{"id":21174,"date":"2011-05-19T05:18:36","date_gmt":"2011-05-19T09:18:36","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=21174"},"modified":"2011-05-19T05:18:36","modified_gmt":"2011-05-19T09:18:36","slug":"condo-hotel-investment-turn-key-hassle-free-double-digit-yields-in-a-proven-and-fast-expanding-market","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/05\/19\/condo-hotel-investment-turn-key-hassle-free-double-digit-yields-in-a-proven-and-fast-expanding-market\/","title":{"rendered":"Condo Hotel Investment: Turn-Key, Hassle-Free, Double-Digit Yields In A Proven And Fast-Expanding Market"},"content":{"rendered":"

Panama City, Panama:<\/p>\n

Dear Live and Invest Overseas Reader,<\/p>\n

I was reminded of the simplicity of investing in a condo-hotel unit during my most recent trip to Medellin, Colombia, where I toured such a unit in a completed hotel. This unit is currently available directly from the developer, as the original buyer couldn’t complete the sale. The hotel is already up and running, making this particular property especially attractive. The developer wants to move it quickly, of course…and the buyer would be investing in a very turn-key asset. My Marketwatch<\/a><\/strong><\/em> members will hear more about this apartment and other current rental investment opportunities in Medellin next week.<\/p>\n

Meantime, another interesting condo-hotel opportunity is currently available in Panama City. I alerted Marketwatch<\/strong><\/em> members to this project a year ago, when it was being offered at launch prices. The project is still in pre-construction sales, but prices have been increased as sales have been made. Still, this is a good opportunity for someone looking for a relatively hassle-free real estate investment in this market.<\/p>\n

The condo-hotel concept is straightforward. You buy the unit, and the management company takes care of renting and maintaining the property. The pricing can seem confusing. You can’t compare condo-hotel pricing in any market with regular retail apartment pricing in that market. You’re not buying a simple apartment.<\/p>\n

You’re buying a furnished hotel unit, including standard hotel furniture, fixtures, and systems, including, for example, television and phone systems, sometimes concierge systems, mini-bar fridge, etc., meaning, again, that you can’t compare condo-hotel units with regular apartments, even on a per-square-meter basis.<\/p>\n

When considering a condo-hotel investment, you have to look at the numbers, specifically the projected yield on the invested amount. And you have to look at the target market for the hotel.<\/p>\n

The condo-hotel in Panama that I’m alerting you to here is called Unicorn. The developer behind it has impressed me by putting in place the right mix of location, room product, and amenities. The projected net yield to owners is in the 10% to 11% range using conservative room and occupancy rates. Generally speaking, you want to get about US$1 of ADR (average daily rate) out of a hotel room for every US$1,000 the room cost to put into service. At that rate, a hotel will make a profit, assuming reasonable operating costs and occupancy rates.<\/p>\n

Occupancy rates in Panama hotels have been relatively high the last few years…into the 80+% range for most hotels. Typically, large flag hotels are profitable if their occupancy is at least 65%. Unicorn has used 60% the first year for their projections, rather than the current market occupancies, increasing that rate in their projections to 75% in year three.<\/p>\n

Unicorn will target the business traveler with their all-suite hotel. Panama City is a market attracting a large and growing volume of executive travelers who return regularly over some extended period (for an assignment or a particular project). Typically, these travelers like to stay in the same hotel, for convenience, comfort, and familiarity.<\/p>\n

Business travelers usually come into town for a day to a week, but longer-term stays for executives in transition can also be accommodated by the design of the Unicorn suites.<\/p>\n

The location of the hotel is convenient to the business and banking district, but not right in the middle of it, meaning it’s not as noisy as that part of the city can be during the day.<\/p>\n

Unicorn will have typical hotel amenities, including a restaurant with room service, a bar, a pool, a gym, and conference rooms. Everything will be managed through a hotel management company so that owners don’t have to worry about the operations of the hotel or the management of their individual units.<\/p>\n

Prices start at US$240,188 for the 47-square-meter suite and US$258,563 for the 50-square-meter suite. All of the 61-square-meter units have been sold or reserved.<\/p>\n

Work through those numbers, and you arrive at a per-square-meter price of a bit more than US$5,000. If these were apartments, they’d be overpriced, but, remember, they’re not. They are hotel rooms…furnished hotel rooms with amenities, facilities, and fixtures that you don’t get with an apartment. And you’re buying for investment, meaning the yield projections and how they will be achieved are what you need to compare to other opportunities you might be considering.<\/p>\n

In this case, getting a double-digit net yield with no management hassles to worry about yourself is a good deal.<\/p>\n

Furthermore, as the project in Panama, where bank financing is available to foreigners, you can get a loan for 70% of the purchase price if you qualify, making the cash requirements for investment even more attractive.<\/p>\n

For more details on Unicorn, you can get in touch here<\/a>.<\/p>\n

Lief Simon<\/p>\n

———-<\/p>\n

This Ain’t Easy <\/strong><\/p>\n

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———-<\/p><\/blockquote>\n

Article courtesy of:<\/strong><\/p>\n

Kathleen Peddicord<\/p>\n

Founder and Publisher Live and Invest Overseas<\/p>\n

http:\/\/www.liveandinvestoverseas.com<\/a><\/p>\n

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See More of Kathleen\u2019s Special Reports:<\/strong><\/a><\/p>\n