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Four great reasons to consider investing in a hotel unit

Render – LQ Hotel, The Residences, Ellerslie.

At Safari Group, we are very well known for our mixed use developments. We don’t just cater to those who want to buy or invest in residential apartments, the hotels that make up a key part of our developments are also an amazing opportunity whether a first-time property investor or a very experienced investor.

While it may be a foreign concept to a lot of Kiwis, many world-class hotel operators offer individual ownership of their hotel rooms.  Once purchased, the owner of the room, leases the unit back to the hotel operator for a set period, allowing them to take care of the occupancy, cleaning and maintenance.

And what does the investor get? Monthly fixed income with no hassle! To be clear, this is not a timeshare, nor is this a management agreement. Our unique approach means that you are the owner of a freehold title, with a commercial lease in place.

If you’re interested in learning more, have a read below of our four great reasons to consider diversifying your residential property portfolio with a hassle free, bite sized commercial asset – a hotel unit.

1. Guaranteed monthly rental income

We’ve already let you in on the first reason to consider investing in a hotel unit but here’s a little more detail – Hotel unit investments give consistent returns in the form of rental income, whether the unit was occupied that month or not. Compared to an apartment investment, they are also a very low cost purchase.

For example, our LQ Hotel development in Ellerslie provides a secure return of up to 6.09% (gross) with fixed growth built in throughout the lease term, including an annual increase of 2% after 3 years.

An entry level hotel unit in this development starts from $252,680 and has a gross rental income of $15,000 per year.*  

Hotel units have two fairly predictable outgoings: Body Corporate fees and Regional Council rates, that the owner is responsible for.  

2. Security of a trusted hotel brand and management

We have a long standing partnership of, with Wyndham Hotels & Resorts, developing and managing hotels under their Ramada, Wyndham gardens and LaQuinta (LQ) brands. Not only do we have a proven track record, we also launched the first hotel under their LQ brand in Australasia, as part of our Kawarau River development in Queenstown. 

As we mentioned earlier, the unit is managed for you by a hotel operator (more often than not it’s us – Safari Hotels). This means you don’t need to worry about maintenance, occupancy or even cleaning, we cover it all.

Ramada Hotel Wellington

Photo credit: Ramada Hotel Wellington

3. Available to overseas buyers

Not an NZ resident? That’s ok, hotel units are available for purchase for overseas investors. 

Under the Overseas Investment Act 2005, non-residents can invest in hotel units as long as the hotel is constructed on a non-sensitive land, you lease the room to the hotel, sell or renew the lease when it expires, and you don’t live in the unit.**

This may sound a bit restrictive, but we haven’t mentioned one of the best benefits yet.

4. Free accommodation every year!

And the final reason we think you should consider investing in a hotel unit is that any investor, whether they are a NZ resident or not, gets up to 10 free nights of accommodation per year. Perfect for pre-planning your holidays each year, or even offering a free stay to family and friends.

Hotel room

Photo credit: Render of room in the LQ Hotel Parnell.

Safari Group Hotel investment opportunities

If you can see the benefits of adding a bite-sized commercial investment with lots of additional benefits to your portfolio, but still have questions – That’s understandable!

We can help with any questions you may have and show you what we currently have available.

Take a look at our Ellerslie, Parnell and Wellington opportunities here, and then give us a call on 0800 790 790, or email us on sales@safarigroup.co.nz

*Quinovic

** Linz.govt.nz