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Rental guarantee concepts with the backing of major hotels


Rental guarantee concepts with the backing of major hotels

This post is also available in: English

It is extremely hard to find investments that would be classed as ‘safe’, especially in today’s uncertain markets.

Anything that comes with a ‘guarantee’ should be investigated as all may not be quite as it seems but rental guarantee concepts are, overall, pretty safe investments offering healthy, realistic returns. You do need to do your due diligence but the basic concept is sound so long as it has the correct amount of backing.

Rental guarantee concepts are relatively new although there is nothing too earth shattering about how they work. They stemmed from developers wishing to offer incentives to buyers to purchase their units – nothing new there, but this time these incentives were aimed solely at investors. After all, these were the people coming out of the recession who were cash rich and there was plenty of demand for rental properties, both for permanent residences and for holiday makers.

The opportunity was certainly there for all parties to make a good return and the risk was reduced. Risk and return are very closely correlated so if risk is reduced but the returns are higher than you would normally expect, there is bound to be a high level of interest. And so the rental guarantee concept began.
As these types of scheme became increasingly popular the groups offering them became more varied. This has gone to such an extent now that even major 5-star hotels are getting involved. Initially, this may raise a few questions but if you think about it, it makes perfect sense. Hoteliers wish to spread their risk in terms of the initial outlay whilst investors benefit from the expertise of these world-renowned brands and the fact that they are all situated in prime locations.

Are there any reasons why you wouldn’t want to invest in a 5-star hotel? The answer is that it is very hard to find any reason why you wouldn’t. They have fantastic international backing in terms of financing, marketing and reputation. They only choose prime locations and cities that are thriving, and they will have done more due diligence than would be possible for the average person on the street. In short, if you are looking for someone to follow and provide a safe investment you could definitely do a whole lot worse.

So that you get a good idea about what is available from these types of rental guarantee let’s consider those that are available here in Thailand. There are three obvious ones to consider. The first is in Pattaya and available in the already completed Amari. The deal available is a guaranteed return of 5% p.a. for five years with a predicted return of 8% p.a. in the following years although this is NOT guaranteed.

The next two offers are available on the island of Phuket and are in hotels from Ramada and Best Western, both of which as currently under construction. To reflect this fact, the deals on offer are guaranteed returns of 7% p.a., again for five years with projected return in future years of above 10% p.a. All of them are attractive offers due to the relative low risk and the returns offered.

If you are considering investing in rental guarantee concept it would be very wise to take a closer look at the deals that are supported by these well-known, 5-star hotels.

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