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JoeDavola

Hotel Investments?

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OK - what's the catch here. I just got an email to my inbox advertising this hotel that's being built in Belfast where you can buy rooms:

https://www.propertypal.com/george-best-hotel-belfast/d2174

My gut tells me that for the money people to be offering plebs a chance to invest in something big like a hotel, there must be some sort of a scam going on - what is it? Does this represent taking on a risk (i.e. if there's big maintenance costs or nobody stays in it) without the reward (i.e. a flat return even if someone stays in the hotel room at big ££ ever night of the year)?

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The catch is the risk of the operating company going bust and your not getting any of these "guaranteed" pay outs.

Have a look at the detail of where your money goes and from where your return comes.

If your money is coming from a debt laden subsidiary that can be cut loose if the business model starts struggling then you will lose your money.

If it's coming from a big and financially strong company then pile in.

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7 minutes ago, JoeDavola said:

OK - what's the catch here. I just got an email to my inbox advertising this hotel that's being built in Belfast where you can buy rooms:

https://www.propertypal.com/george-best-hotel-belfast/d2174

My gut tells me that for the money people to be offering plebs a chance to invest in something big like a hotel, there must be some sort of a scam going on - what is it? Does this represent taking on a risk (i.e. if there's big maintenance costs or nobody stays in it) without the reward (i.e. a flat return even if someone stays in the hotel room at big ££ ever night of the year)?

 

Quote: This agent has listed the accuracy as: Exactly Right

'year for'

"8%net for year for and 9% net per annum for years 5-10"

:Jumping:

 

Edited by Hopeful

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A similar one was a company offering to install solar panels backed by a lian from Barclay's the repayments upon which would be covered, and increasingly more than covered, by the tariffs earned.

They weren't, anywhere near. A friend did this, without asking me, and successfully sued Barclay's.

The selling company had gone bust; they sold the systems at double their value (16 panel system for £12k rather than £6k), took the money out, and wound up the co. before the claims came in.

And anyone could have done this themselves by just taking out a loan to buy the panels at £6k, persuasive marketing.

The parallel would be if you could buy similar hotel rooms for half the price without the generous guarantees; if you can then that company will also be going bust having taken your money out as dividends.

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I know of this little scheme

http://www.principalinternational.co.uk/property/raithwaite-hall

I'm no sure if this is a current offer or the one when the hotel was first built (2010?)  However, the first 'investors' to purchase these hotel rooms lost the lot when it went tits up.

http://www.yorkshirepost.co.uk/news/owners-of-luxury-whitby-hotel-put-into-administration-1-7375063

Rising from the ashes, the 'new' owners are planning a centre parcs type facility.  the locals don't want it and it is 50 miles from the nearest decent road.  Oh and the north east coast is fecking cold and bloody miserable in the winter (summer too normally).

I am sure they will be looking for canny investors.  Fill yer boots Joe.  (this is not financial advice :))

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40 minutes ago, One percent said:

I am sure they will be looking for canny investors.  Fill yer boots Joe.  (this is not financial advice :))

Ha!

Thanks folks - I'd guessed it was too good to be true. They must have either run out of money or just can't get funding to build the hotel. They were meant to start work on it ages ago (I pass the building most days as I live nearby) but nothing's been done. Something's up.

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Its a scam that twists itself to avoid regulation.

If you sold the hotel to a number of investors youd be subject to secutiry laws - i.e. you cannot make up claims on how much investors will get.

So, you pitch the a small, wholly owned compoment - a hotel room, a ask of whisky, a bottle of wine, an ostrich. This avoids collective invstment and regulation.

In the case of hotels, you buy the room.

'. The returns for this investment are guaranteed and are 7% net per annum for years 1-3, 8%net for year for and 9% net per annum for years 5-10. There is a buyback option from year three onwards and begins with a 6% uplift on the original purchase price, increasing by 2% each year, capped at 12% uplift. All returns are contractually guaranteed and paid quarterly. The great thing about this opportunity aside from the returns is it’s built in exit strategy.'

Wow. I get a 7% guarenteed for 3 years! Thats easy done - just pa them out of the money they investment minus any money you make fro mthe room.

Of course theyll buy back the room - if they ar still solvent in 3+ years. And have the money.

So, what abotu the cost of running he hotel - the shared areas, the bar, the restaurant , the decor, the front desk????

ASk a local hotelier what their occupancy rate is.


 

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21 hours ago, spygirl said:

Its a scam that twists itself to avoid regulation.

If you sold the hotel to a number of investors youd be subject to secutiry laws - i.e. you cannot make up claims on how much investors will get.

So, you pitch the a small, wholly owned compoment - a hotel room, a ask of whisky, a bottle of wine, an ostrich. This avoids collective invstment and regulation.

In the case of hotels, you buy the room.

Fascinating, thanks for the info.

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