Strata Title Hotel Investments

Want to know why Strata Title Hotel Investments can be a "Hell Hole" for the unwary?

Hello, Colm here ...

A RESIDENTIAL INVESTMENT MANTRA FOR YOU!

WHEN ALL ELSE FAILS,
IF YOU CAN'T "LIVE" IN IT PERMANENTLY,
DON'T BUY IT!

What do I mean by that?

Flexibility should be your investment by-word. One of those important 'bench marks' that you should achieve.

Strata Title Hotels are built because:

* Major Institutions don't want to own Big Hotels.

* Not to allow you to enjoy being part of the growth in the hospitality industry.

So What Are The Facts:

Why are Hotels built and sold by Strata Title?

Why do Developer Build Strata Title Hotels?

Developers will say, "strata title allows the average investor have a part of the inner city tourism/business market."

What's the real reason for Building Strata Title Hotels?

Major Institutional investors in Australia do not want to own hotels any more. They got into them in the 70's, 80's and generally, did not enjoy the experience.

Why?

The ROI was not 'there.'

Institutions are essentially passive investors and like Flexibility in their investments. Financial institutions do not run Hotels. So they must engage Managers, like Sheraton, Hilton etc to manage the hotel for them.

Institutions want to engage the Manager on a Lease Aggreement; however Managers prefer a Management Agreement Arrangement.

Management Agreements are the NORM for the industry, and the Managers are expert at maximizing their performance bonus and the amount left over (the investment return) for the institution has generally not been good enough for institutions to continue to want to expand their hotel investment portfolios, even in CBD locations.

So if that is the attitude of the 'Big Boys' and a developer believes there is a market now for a new hotel, their only other option is to go the strata title route and go for the 'Little Guys.'

Can I put it another way, with no insult intended.

The investment performance of hotels is not good enough for the Professional Institutional Investors who have 'money power' and 'high skill' behind them; so let's go for the non-professional investors through strata title.

Remember the Big Boys employ the Big Managers. The Big Managers don't get involved in Strata Title Hotels. That's left to the lower ranked managers & the lower ranked developers.

I don't think that is good enough, do you?

1. If the complex is run as a HOTEL, you can't live in permanently, 'cause it's too small.

2. If its internal space IS UNDER 50sqm a buyer will not get bank finance.

3. And finally if it has a RENT GUARANTEE you've now got three good reasons to do a '180 degree' turn and RUN.(See separate report)

If investors decides they still want to buy a strata title hotel unit, the most important document to read is the Management Agreement and if there are any Guarantees; who is underwriting the Guarantee; HOW STRONG ARE THEY?

Strata title hotels have a poor history unfortunately, because of the reputation and lack of experience of the developers who put the deals together AND PROMOTE THEM.

Only a few months ago I helped a family who had been in one of these strata title hotel investment for five (5) years. They sold for less than they paid. Enough said.

Let's get away from hotels:

Let's suppose your financial world has fallen apart, and you have to cut things down to the bone.

If your investment unit/house has been designed for the investment market, it is generally smaller than what society regards as a normal size.

You and I know what a NORMAL house and unit looks like and feels like; don't we?

When you see Rent Guaranteed Investment Real Estate, have you noticed that they just don't look like we expect normal houses and units to look.

Usually they are much smaller and are built in a complex.

So the first rule is never buy any property that is under 50 square metres internal area. Do not include balconies in this calculation.

IF THE AREA IS UNDER 50 SQM INTERNAL AREA, BANKS WON'T ACCEPT THE UNIT AS SECURITY.

Oh, you say, 'but my friend was able to buy one and the bank lent them the money.' Yes, you are correct BUT it is usually a finance deal done by the developer with the bank and the bank will usually have security over other assets.

When you come to sell, a bank won't lend BUYERS money for a property under 50 sqm internal area, and that leaves you looking for a 'CASH BUYER ONLY.' Your Flexibility is wounded, but you can't see the blood yet.

The unit/house is physically not considered standard, as compared to what is normally on the market. They can vary from small houses/townhouses in outlying areas or inner city units in complexes being run as a hotel/motel.

The Real Estate Development Coach

Author of "Residential Development Made Easy"

Copyright Colm Dillon, October 2003
All Rights Reserved.

Colm Dillon author of "Residential Development Made Easy" the only 'How To' Become a Developer eBook, selling in 38 Countries, has developed $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopment coach.com/realestatedevelopment.html

---

Property Investment - What Future For the Biggest Bubble of All Time?

The Economist magazine published a special report in this months... Read More

If You Move Yourself

You'll want to take some items in your own car... Read More

Best Time to Buy? Best Time to Sell?

When is the best time to buy? When is the... Read More

Strata Title Hotel Investments

Want to know why Strata Title Hotel Investments can be... Read More

What Should I Do If My Home Isnt Selling?

Suppose you've been trying to sell your home for months.... Read More

Purchasing Land: What To Look For

It doesn't take long to realize that finding the right... Read More

Realtors Brainstorm For Business

Even though rates are down opening up the market for... Read More

Relocation Humor: Why I Bought A House

The Rental Experience in South FloridaReaders: This is based on... Read More

European Second Home Prices Wilt in Drought

Spain and Portugal have suffered one of their worst droughts... Read More

Real Estate Investing Works In Your Area Too!

I hope you had a spectacular weekend!Things have been going... Read More

How to Create Cash Flow Out of Thin Air!

Want to see a trick every real estate investor will... Read More

Quality of Life in Sussex County Delaware. Facts, Statistics, Observations and even opinions!

We Sussex Countians are fortunate in many ways as we... Read More

Selling by Owner Escrow or Closing Checklist

Home sellers should keep on top of their pending sale;... Read More

What Is Home Staging And How Does It Help To Sell My House

Home staging is the concept of preparing a house for... Read More

Termite and Moisture Damage Not Reported

I have done so many appraisals where I saw obvious... Read More

Fixing Houses: Mixing Your Own Paint for Savings and Harmony

To make the maximum profit on your investment properties, you'll... Read More

Spanish Estate Agents and Inspection Visits

The only way to buy a home in Spain is... Read More

Flipping Houses for Gold: Three Tips to Help You Find the Perfect Fixer

Many real estate investors enjoy "flipping houses," or buying and... Read More

Foreclosure

Foreclosure under a mortgage requires a court ordered sale conducted... Read More

Kings Bay Georgia Real Estate - Be Picky When You Choose your Realtor!

I have been a mortgage lender for many years and... Read More

Content Ideas for Ads and Brochures When Selling Your Home

Even in this hot real estate market, selling your home... Read More

Are You Trying to Hit a Home Run With Your Prospects Without Asking Them on a Date?

Real Estate email marketingDo you remember the old School girl/boy... Read More

Building A Home? Want To Ask A Builder The Right Questions - Not The Dumb Ones!

These are real builder questions that I got from readers... Read More

The Person With The Most Money Wins!

More money can mean better:- Health Care - Relaxing... Read More

Five Ps of Selling Houses

1. Planning:Know Your Target BuyersThink about your neighborhood and the... Read More

10 Tips to Sell Your House Faster!

Here are some Handy wee Tips to help you Sell... Read More

Green Building Media Fact Sheet - Past, Present & Future

PastSpecialized, niche home builders began constructing resource-efficient, environmentally sensitive homes... Read More

Home Buying ? School District Issues

A good school district is a key factor in home... Read More

Buying Land Online

In the old days people generally only bought land and... Read More

A Simple Step by Step Aproach to Fail Your Way to a Million Dollars

If You want to be Financially Successful you need to... Read More

Good Tenants - Learn Twelve Ways Landlords Keep Them

Happy, Long-term Good Tenants Paying On Time How to Create... Read More

Kings Bay Georgia Real Estate - An Amusing Tale About a Real Estate Agent

This story is true and not meant to hurt anyone,... Read More

Property Investing Secrets 3

Property Investing Secrets: When you Make Property Easy to Buy... Read More