By Fitz Villafuerte (Ready To Be Rich)
October 23, 2020
Real estate ranks high among Filipinos when it comes to investments. A lot of people I’ve met, especially OFWs, actually prefer having this tangible asset over paper assets like stocks.
For an average Filipino, real estate investing often means buying and selling properties or using a condo or apartment for rental income. However, the truth is that real estate investing is a broad subject and there’s a variety of ways to make money from it.
For example, aside from residential properties, one can also invest in an office unit or commercial space. Real estate assets don’t just refer to houses, apartments, and condominiums; it can also include farmland, buildings, and many others.
The Rise of Condotels in the Country
In recent years, condotels and consequently, condotel investing opportunities are slowly gaining popularity in the country.
But what exactly is a condotel? And what does condotel investing mean? The term condotel is a combination of the words, condominium and hotel. It refers to a condominium property with hotel units and facilities.
A lot of people buy and invest in a condominium property with the hopes of earning rental passive income. However, this has proven to be a challenge because it’s not that easy to find a tenant. And some developers have also discouraged using their units for Airbnb because of security reasons.
Condotel investing provides an alternative way to earn rental income because the real estate company will operate the property like a hotel. And you as a unit owner will get a share of this income. Plus, you don’t have to worry about getting tenants at all.
As early as 2018, I’ve already noticed big developers getting into this real estate space. Among them, Mang Inasal founder Injap Sia through his real estate company, DoubleDragon Properties Corp.
Main Advantages of Condotel Investing
1. It’s passive income from rentals.
2. You earn income regardless if someone stayed in your unit or not.
3. You’re buying an asset.
4. And because it’s an asset, you can earn from property appreciation.
Usual Disadvantages of Condotel Investing
1. Condotels are usually more expensive than condominium units.
2. Financing them through a bank loan can be difficult.
3. Condotels will charge you management fees and maintenance costs.
4. Your income depends on the health of the travel and tourism industry, which is the hardest hit sector by the pandemic.
Are condotels a good investment?
As I always say, whether an investment is good or bad depends a lot on your financial goals. What do you want for your personal finance? What are you looking to achieve in the future?
Condotel investing is primarily for those who are looking for long-term passive income. It’s especially good for those preparing for retirement as it provides additional cash flow when you retire and stop working.
Moreover, it’s important to do your research before getting into real estate investing. It will be good to check out condotel projects yourself to learn more about this opportunity and see if it’s aligned with your financial goals.
And one such project you can check out is Hotel 101.
Real Estate Investing with Hotel 101
Hotel 101 is developed by Hotel of Asia Inc., a subsidiary of DoubleDragon Properties Corp., which is one of the leading companies listed on the Philippine Stock Exchange. They take pride in providing a simple and worry-free investment for Filipinos and even foreigners alike.
Hotel 101 provides all the advantages mentioned above for this type of property investment.
You earn rental income without the headaches of being a landlord.
The company takes care of everything, from maintenance to marketing, from fixing leaky faucets to finding tenants.
You earn income regardless if someone stayed in your unit or not.
That’s because the revenue share from the hotel business operation is distributed equally to all unit owners.
All unit owners will receive equal shares from 30% of the gross room revenue. And unlike other condotels that pay quarterly or annually, Hotel 101 provides monthly cash flow. Income yields are automatically deposited to the unit owner’s account every 16th of the succeeding month.
It is your asset.
You’re not just buying timeshares here. You own the property because this is a titled investment backed by a condominium title. This means you are free to mortgage it, resell it, or even leave it as an inheritance to your kids.
You can earn from property appreciation.
That’s because it is still, after all, a real estate asset. If the property is in a good location and is managed well, then there’s no reason for its value not to go up.
Plus, you get this additional benefit:
As a unit owner, you also get to enjoy 10 free nights of stay per year – 5 in your unit’s location, and 5 in any operational Hotel 101 branch.
But how about the disadvantages mentioned above? Well, that’s where Hotel 101 becomes different from your usual condotel investment.
Condotels tend to be more expensive than your regular condominium unit because there are additional costs for furnishing the unit and installing hotel amenities and facilities inside the property.
However, with Hotel 101, the unit comes fully furnished with no ongoing repairs, maintenance, or renovation fees at the same price as comparable condominiums in its vicinity.
Condotels are difficult to finance through a loan because it’s a complicated process for the bank to foreclose the unit when the borrower defaults on the payments.
But the case is different with Hotel 101 as it is accredited with BPI Family Savings Bank to make the loan process smoother at turnover.
Moreover, Hotel 101 won’t charge you with property management fees and maintenance costs. Yes, the unit owner does not share in the cost of operations, only on the revenue of the hotel, so it has no downside for as long as the hotel is operating and earning revenue, regardless of whether it is profitable or not because Hotel 101 takes on the operational risk.
And lastly, despite the pandemic, the 1H 2020 annualized gross yield of Hotel 101 was 7.7% because the hotel was still fully operational from January to June 2020.
Hotel 101 invests in prime tourist and business locations around the country. If you live in Metro Manila, you’ve probably already seen their first operational hotel investment project, Hotel 101 – Manila, near the Mall of Asia.
And at present, they’re already pre-selling Hotel 101 – Fort and Hotel 101 – Davao. And there are already plans to put up Hotel 101 in Cebu, Palawan, Boracay, Bohol, and Libis.
How does Hotel 101 compare with other condotels?
- One size for the Happy Room (21 sqm) = same revenue share for all unit owners
- 10 free nights (5 free stay vouchers to be used in project where unit is located, 5 free stay vouchers can be used in any Hotel 101) = more paid nights = higher revenues for unit owners
- Nationwide project locations: Operational: Manila; Pre-Selling: Fort & Davao; Soon to Launch: Boracay, Cebu, Bohol, Palawan, Libis
- Revenue share is distributed monthly
- Revenue share is based on Gross Room Revenue
- Different sizes of units = complicated computations
- 15/30 free nights, not valid on peak days
- Limited locations
- Revenue share is distributed quarterly/annually
- Revenue share is based on Net Room
With businesses now restarting and travel restrictions slowly being lifted, the outlook is optimistic for a Hotel 101 investment.
Injap Sia, during an interview with Inquirer, says, “Our aspiration for Hotel 101 is to be the largest hotel chain in the Philippines and the most relevant, that will be top-of-mind of the market. It will be like the Mang Inasal or the Jollibee of hotels.”
If you’re interested to learn more about Hotel 101, you can:
- Visit the Hotel 101 website: www.hotel101sales.com.ph
- Contact their sales at +639175078111
- Send an email to email@example.com
- Or message them on their Facebook Page: https://www.facebook.com/hotel101salesph
Disclosure: This article is written in collaboration with Hotel 101.
Original article: https://fitzvillafuerte.com/real-estate-investing-with-hotel-101.html