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Nov 15, 2022

Can You Really Buy a Hotel Room? Yes!

Yes! Investing in hotel rooms can be fun and rewarding.

How cool would it be to own a hotel? More so than a rental house or commercial storefront, it’s a glitzy asset that just screams prestige … especially if the hotel in question is an upscale five-star crown jewel in the hands of a Blue-Chip brand-name management company.

For most investors, though, buying a hotel is out of reach. Investors with shallow pockets typically had four choices to buy exposure to lucrative luxury hotel revenue:

Pool money into a syndicated or crowdfunded acquisition.
Buy shares in a hotel-focused REIT.
Buy stock in a management company like IHG or Red Lion.
Buy the hotel outright—usually reserved for the very wealthy.

But what if you didn’t have to buy the whole hotel? What if you could just buy a hotel room and own it individually, like a condominium in an apartment building?

Is such a thing even possible? Can you invest in a single hotel room in a resort or hotel complex? The short answer is yes. At Ruebush Group we build and operate boutique hotels and we allow anyone to buy a hotel room and earn lucrative monthly income from the daily bookings.

BUY A HOTEL ROOM TODAY

Looking for a great investment? Hotel rooms can boast higher occupancy rates and greater monthly returns than regular condominiums or “Airbnb” style rentals. You can start building your income producing real estate portfolio by investing in hotel rooms from $50,000 and up.

SEE INVESTMENTS

HOW BUYING A HOTEL ROOM WORKS

Investing in Hotel Rooms

HOTEL MANAGERS AND DEVELOPERS ALL OVER THE WORLD SELL CONDO HOTEL ROOMS TO INDIVIDUAL INVESTORS OR GROUPS.

Some condo hotels are new developments. Investors buy rooms at the market rate and usually bear no exposure to costs until the hotel opens, at which point the room might be worth much more than it was when it was just a picture on a blueprint. Condo hotel owners may sell rooms to help finance the completion of the project with no debt service payments, since they owe the owners no revenue until the hotel opens.

Other condo hotels sell rooms in completed hotels, possibly to finance renovations or future projects. Condo hotel agreements may have a minimum holding period requirement that owners have to abide by, or incur early-sale penalties.

Some condo hotel agreements include a buyback clause, entitling the management company to buy back the room at the end of the holding period at an agreed-upon price. This can be a great way for investors to reduce their risk and lock in a predictable return.

Other condo hotel agreements allow the investor to resell the room at any time. Reselling the room on the open market at a larger profit can be very lucrative if the hotel itself is managed well and generates good income.

Usually, the condo hotel has management in place, possibly a major brand tasked with filling the rooms and maintaining or increasing the hotel’s Revenue Per Available Room (RevPAR). Each room owner is entitled to a share of the profits realized by the operation of the hotel.

The management company is in charge of marketing, maintenance, guest relations, and operations. The room owners’ only job is to watch the revenue roll in. In this way, you can truly buy a hotel room, own the real estate outright, and earn passive monthly income.

Hotel room owners sometimes have the option to book their own room, often with first right of refusal on available nights. The condo hotel may even have allowances for room owners to manage their own investment, renting the room themselves like a long-term condo property or a short-term rental like an AirBnB or VRBO.

However, other condo hotels require room owners to subject their ownership interest to the contract hotel manager. This is often the more profitable and less risky option anyway, especially if the management company is reputable and offers a guaranteed return or buyback option.

In the case of Ruebush Hospitality Group, this is exactly what you can expect. We require that the room is always managed as part of the hotel because this produces the best return on investment for you as an investor and makes the investment much less risky. We even guarantee you will earn a MINIMUM of 10% yearly and we offer a buy-back guarantee. Click here to learn about hotel room co-ownership.

RUEBUSH GARDENS HOTEL

If you would like to buy a hotel room for dependable monthly income, and so you can have a free vacation once in a while, you should look at the rooms for sale in Ruebush Gardens Hotel. You can start building your income producing real estate portfolio by investing in hotel rooms with as little as $5,000 today.

SEE INVESTMENTS

ADVANTAGES IF YOU BUY A HOTEL ROOM AS AN INVESTMENT

LOW BARRIER OF ENTRY

Whereas other commercial real assets may start in the multi million-dollar price range, hotel rooms typically range from $30,000 to $250,000. This is much more in the price range of average investors, and financing may be available.

In the case of Ruebush Hospitality Group you can expect extremely high quality rooms at very competitive prices and we offer in-house financing without any interest charges to make it affordable for anyone to buy a hotel room. We also guarantee you will earn a MINIMUM of 10% yearly return on your investment and we have a buy-back guarantee. Click here to learn more.

How to Own Hotel Rooms

ACCESS TO UPSCALE PROPERTY

Investors who can’t afford a luxury house or condo may be able to afford to buy a hotel room in a luxury resort property. The luxury hotel market has proven over time to be more resistant to recessions than mid-market or budget hotels.

PASSIVE INVESTMENT

With professional management on the job, hotel rooms represent an opportunity for true “mailbox money,” a turnkey, management-free real estate investment.

In the case of Ruebush Hospitality Group, your investment is 100% hands-free. It is a completely passive investment. We take care of every single detail. All you do is invest, use the hotel room any time you want for FREE, and the rest of the time you receive your guaranteed monthly income.

POTENTIAL TAX ADVANTAGES

Tax implications of hotel room investment vary based on the country or state where the asset is located, as well as the country or state of residence or incorporation for the buyer. However, commercial real estate often enjoys privileged tax treatment compared to residential real estate – when you buy a hotel room, it is one of the least expensive ways to buy commercial real estate.

In the case of Ruebush Hospitality Group, we develop and operate luxury boutique hotels in Batumi Georgia due to several important factors. Low taxation is an extremely important aspect. When you invest with us in Batumi, you only pay 5% income tax on your rental earnings, and there is NO property tax and NO resale taxes (capital gains) if you hold the property at least 2 years. So, you can buy a hotel room at a very affordable price, earn passive income as long as you wish, and then resell the property later for even more profits. And all the while, only pay 5% tax on your income.

Learn more about taxation in Georgia.

Taxes and Buying Hotel Rooms

RISKS IF YOU BUY A HOTEL ROOM AS AN INVESTMENT

RISK OF LOSS

If the hotel fails, either due to a decline in RevPAR or a construction project that stalls, the management company may not be able to fulfill its return or buyback guarantees. In the event of catastrophic failure, any deposits or down payments may be lost as well.

The most important part of the buyer’s due diligence in buying a hotel room is to scrutinize the management company. What is their track record? Are their other hotels successful? What is the RevPAR of other hotels they have under management? Do they complete their build projects? Do they have cash and access to credit?

This is why Ruebush Hospitality Group is a company you should consider. We have absolutely zero debt and we have a proven track record of producing extremely high profits since 2013. As a matter of fact, we produced profitable returns for our investors even during the 2020 and 2021 global pandemic. We have millions of dollars in real assets, zero debt, and a long-term record of successful and profitable operations. Your investment is safe, secure, and guaranteed when you invest with us. Click here to see why you should invest with Ruebush Hospitality Group.

LACK OF CONTROL

Whereas other commercial real estate assets afford the investor the opportunity to pick their management team and make critical management decisions themselves, buyers of hotel rooms cede a lot of control in the management of the asset to the management company.

Again, investors must do their due diligence on the management company. Replacing a management company is possible, but it often requires difficult and cumbersome consensus-building among the room owners.

And again, this is why Ruebush Hospitality Group is such a great choice! With a track record of producing very high rates of return for hundreds of investors, we offer the security and dependability you need when making this type of investment.

If you are interested in buying a hotel room, let’s talk. Our real estate consultants can explain all the ins and outs of owning a hotel room.

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Buying a room - features of the transaction and possible risks for the new owner

When choosing a property, buyers may consider purchasing a room. But buying a room is associated with certain risks and negative consequences that are not found in transactions with ordinary apartments.

We explain how to buy a room and what needs to be done to avoid possible risks.

There are risks involved in buying a room. Photo: Mir Kvartir

Reasons for buying rooms

Among the main reasons for buying rooms are the following:

in most cases a room costs less than an apartment in the same area of the city;
if you buy a room even for a small price, you can make good money if you rent it out for a long time or by the day;
if a room is for sale in a communal apartment, often the house in which it is located is located in the central part of the city.

The room can be sold in an ordinary apartment, communal or hostel. Rooms in communal apartments in most cases are allocated as a separate object - this is how you can buy a room. In ordinary apartments, you can buy a share in common property. When considering buying a room in dormitories, it should be borne in mind that they can only be sold if they are removed from a special housing stock.

Is it worth buying a room - hidden risks of the transaction

With the positive aspects of buying a room, there are hidden risks in the transaction. They need to be taken into account when deciding on the acquisition of premises.

The size of the room may be small

Apartments or dormitories may have rooms of different sizes. Large rooms in some communal apartments can reach 40 square meters. But in other objects there may be small rooms, for example, only 6 square meters. This must be taken into account when purchasing a room for a family or with the intention of renting it out.

There may not be enough sanitary facilities for all residents

Each room can accommodate several people. Therefore, if there are a large number of residents, there may be a problem with visiting the sanitary unit.

A similar problem may also apply to the number of stoves in the kitchen. If there is only one stove, and there are more rooms than the number of burners, this will create inconvenience when cooking.

The house may belong to the historic housing stock

This will not interfere with the deal. But the fact that the building belongs to the historical fund can become a reason for serious restrictions when trying to carry out certain repairs or redevelopment.

Shared maintenance of common areas

Corridor, kitchen, bathroom, storage room are considered common property. Accordingly, repairs and work related to their maintenance will have to be carried out jointly with other owners. This can create some difficulties - some tenants may refuse to invest money or demand that cheap materials be purchased. It is also worth considering that the common areas belong to the owners of the rooms on the basis of common shared ownership. This means that the larger the area of one room compared to others, the more its owner must spend on the maintenance of common areas.

You can buy not a room, but a share in an apartment

If the extract from the USRN indicates that the owner owns a share in the common property right, then he owns not the room, but part of the apartment. For example, a property has 2 owners and each of them owns 1/2 of the common property, but the area of the rooms is different. By acquiring a room in this way, the new owner may find that part of the room he has moved into may be used by another owner.

Neighbors may be unreliable

The owners of neighboring rooms may be people with alcohol addiction, drug addiction, lead an antisocial lifestyle. Even if everything was fine when buying a room, one of the rooms can be sold to other people who turn out to be unreliable.

Features of buying a room

How to search for a room

You can search for a room on the same sites where ordinary apartments are sold. When viewing ads, you should pay attention to photos of the sanitary unit, kitchen, corridor, entrance and the house outside.

When viewing ads, you need to pay attention not only to the condition of the room. Photo: mirkvartir.ru

What to check when inspecting a room

When inspecting housing, pay attention to the condition of the premises itself, common areas. The building itself is worth seeing. If there are cracks in the walls outside, if there is damage to the foundation, if the entrance is in poor condition, the house may be considered emergency. If the house participates in the renovation program, there is a chance to get a new equivalent housing. In other cases, other housing can also be obtained, but it may not suit the owner both in terms of its characteristics and location.

When viewing, pay attention to soundproofing, especially when buying rooms in a hostel and a communal apartment. Some properties may have poor soundproofing.

How to find out more about your neighbors

To view the room, it is better to choose the evening. So there are more chances to see other tenants of the apartment with whom you will have to live nearby. It is worth paying attention to the age of neighbors, their marital status. You can chat with someone from your neighbors or with residents of other apartments to learn more about the people with whom you will have to live in the neighborhood.

Why is it important to check utility bills

The absence of debts when viewing a room should be taken with special care. Since paying utility bills is a shared obligation, some tenants may pay for services and some may not. For this reason, debts can form. In addition to information about debts, you need to find out how the tenants of the rooms pay utility bills. They have to negotiate depending on how much room is compared to others or how much of the property they own.

Is it possible to use maternity capital to purchase a room

Maternity capital can be used to purchase a room. But for this you need to meet several conditions:

the room must be listed as a separate property;
conditions must meet the requirements of guardianship authorities.

If the purchased room does not meet the requirements, the allocation of public funds will be denied.

Will they give a mortgage to buy a room

A room can be purchased with a mortgage, but not all banks approve a loan. This may be due to the condition of the house where the apartment is located. Also, the bank may impose certain requirements on the objects. For example, the period of construction or the absence of wooden floors in the house. The refusal of a loan may be due to the fact that if the borrower is unable to pay the mortgage, the bank has the right to sell the collateral. But it is more difficult to do this than to sell the whole apartment.

How to buy a room in an apartment - what methods are used to conclude a transaction

The transaction must be executed with the conclusion of a contract of sale. But in some cases, the parties agree on another way of transferring ownership - a donation or a partial donation with a partial sale. This is due to the fact that the owners of other rooms have predominantly the right to purchase. If the owner of one of the rooms wants to sell it, he must first offer to buy it for them. But sometimes the seller, for a number of reasons, does not want to deal with this issue. Therefore, the parties to the transaction are trying to circumvent the legal order and resort to other methods.

Registration of a deed of gift

Such transactions are most often concluded if the seller does not want to deal with obtaining consent to the transaction. This happens when the neighbors are in conflict with the seller, when the seller does not know where the owners of other premises are located. Also, neighbors can deliberately delay the deal - say that they want to buy a room, and then ask for time to raise money. Then the seller offers the buyer to purchase a room under a donation agreement. When transferring money, he can issue a receipt in which he indicates that he received money from another person for inseparable improvements to the apartment. For example, wall painting and other repairs, installation of built-in furniture.

But for the buyer, there are many risks in making a deed of gift:

the transaction may be declared invalid. In this case, you will have to return the apartment back;
if the transaction is declared invalid, the seller may not return the money. This is due to the fact that the fact of the sale is not documented. Accordingly, even when applying to the court, it is difficult to return the money;
whoever accepted the premises as a gift will have to pay tax. You need to transfer 13% of the cost of the room. The amount indicated in the donation will be taken into account.

Donation and signing of the DCT

First, the seller donates a small part of the room. For example, transfers ownership of 1 square meter of premises to the buyer. Then the DCT is drawn up, since the consent of the neighbors no longer needs to be obtained. But according to the Civil Code of the Russian Federation, such a transaction is called a sham one. This means that the donation agreement may be considered null and void. In this case, the contract of sale and purchase is declared invalid.

Registration of a contract of sale

This is a legal way to purchase a room. Before the conclusion of the contract, the seller sends notices to the owners of other rooms that he intends to sell his room. The notice indicates the characteristics of the premises and its cost. The notice can be handed over personally or sent by letter of refusal. Neighbors have 30 days to make a decision. If the owner of another room does not want to buy a room, he writes a refusal.

When making a deal, it is important that the room is sold for the same amount that was indicated in the notice. Otherwise, the transaction may be disputed. If the seller wants to make a discount, you will need to send a new notification with the changed price and receive refusals again.

If the whereabouts of other owners are unknown, they are sent notifications to their registered address. For this, a rejection letter is sent. If there is no response within 30 days, the seller of the room is deemed to have done everything necessary to maintain the right of first refusal.

Making a contract of sale is a legal way to purchase a room. Photo: law-divorce.ru

Transaction procedure

The procedure for purchasing a room is similar to the procedure for buying an apartment on the secondary real estate market. The transaction includes the following stages:

The parties agree on the transaction, the cost of the room and other terms of sale.
The seller sends notifications to the owners of other rooms. If desired, this can be entrusted to a notary.
The seller receives a refusal from the owners. If one of the owners of the room is a minor, you need to obtain permission to waive the guardianship authorities. After receiving the refusal of the owners or a month after the notification was sent, in the absence of a response, a deal is concluded.
If necessary, the parties conclude a preliminary contract of sale, the buyer transfers the deposit.
The parties collect the necessary documents. This is an extract from the USRN, passports or birth certificates of the parties, documentary basis for the emergence of ownership and other documents, the list of which will depend on the circumstances of the transaction.
The parties sign a contract of sale, the buyer transfers the money in the manner specified in the contract.
Buyer registers ownership.

Risks of buying real estate in the secondary market: what to check in order not to lose money and an apartment

What is more profitable - to take a mortgage loan or live in a rented apartment?

Payment options when buying an apartment: from cash transfer to using a safe deposit box and secure transactions services

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Utility deal: what you need to know before buying a room in an apartment The room market corresponds to changes in the secondary market as a whole, - said Alexey Popov, - Since 2014, they have fallen in price by an average of 10-12%.

In the past few quarters, the decline in supply prices has stopped.”

The price of a room depends on several factors: the area and the condition of the room, the area, the number of rooms in the apartment, the condition of the common areas, whether the house is being renovated or not.

“The price of rooms also depends on the general pricing policy for the real estate market and the situation in general,” said Alexander Lunin, Leading Manager of the Secondary Housing Department at Azbuka Zhilya real estate agency. “Although, if we compare the general real estate market in Moscow, the price drop coefficient for rooms for the year will be slightly less in 2018 than for the market as a whole, and will be approximately 3–5%.”

What do you buy

In one communal apartment, some of the rooms may be owned by residents, while others may belong to the state. In the "state" part, people can live on the basis of a social contract of employment. The remaining premises - a kitchen, a bathroom, a corridor, pantries, balconies and loggias - belong to the owners on the basis of common shared ownership.

“Some people have a false belief that this property belongs to “everyone equally,” said Yevgeny Zatonsky. - In fact, this is not so: the owners in the common property have their own share, and its size depends on the size of the room. The larger your room, the more area of common property you own. And this means that you should invest more in the maintenance of this property, including financially.”

Photo: Interpress/TASS

Rules for the sale of rooms

Owners of other rooms in a communal apartment have a pre-emptive right to purchase a transferable share in the manner and under the conditions provided for by the Civil Code of the Russian Federation.

“In order to respect the rights of these owners, the seller of the room must send them a special notice,” said Marina Tolstik, managing partner of Miel-Network of Real Estate Offices. - Such a notice is a document, it indicates the price and conditions under which the room is sold. And the owners of other rooms in a communal apartment can purchase the room for sale on these terms.”

If some rooms in a communal apartment are in municipal ownership (not privatized), then a notice of sale must be sent to the relevant executive authority exercising the powers of the owner of the housing stock (in Moscow, this is the city property department).

If within a month none of the owners of other rooms buys the room being sold at the price set by the seller, then it can be sold to any other person. Neighbors can certify their refusal from a notary or when registering a transaction and property rights in the registration chamber. If the owner of the room is a minor, then his refusal can be obtained only with the permission of the guardianship and guardianship authorities.

“If other owners refuse to purchase a room, it can be sold to third parties only at a price not lower than that at which he offered to buy it out to his neighbors. Otherwise, the sale and purchase agreement may be terminated at the suit of the owners of other rooms, ”said Evgeny Zatonsky.

The rule of first refusal does not work if the room is sold to one of the neighbors who own the shared apartment, that is, in this case it is not necessary to offer the purchase of the room to the other neighbors.

Difficulties with the sale

In real life, difficulties with the sale of a room may arise already at the stage of notifying the owners of a communal apartment. The first problem is the search for the neighbors themselves, which sometimes takes a lot of time. There are frequent cases when other owners do not live in a communal apartment and the seller of the room does not know their whereabouts.

“In this case, a written notice must be sent either to the last known address of the neighbor-owner, or to the location of his room, that is, to the address of the same communal apartment,” said Svetlana Krasnova, head of the Inkom-Nedvizhimost legal service. “It is necessary to take such a step, since in case of violation of the pre-emptive right to purchase, the owners of other rooms have the right to demand through the court the transfer of the rights and obligations of the buyer within three months. ”

There are situations when the seller does not know the owner of another room - for example, if after the death of the former owner-neighbor, his heirs did not register their inheritance rights in the USRN.

Photo: Marina Kruglyakova/TASS

“In this case, it is difficult for the seller to understand who should be notified about the sale of the room. Well, if you can find a notary who opened the inheritance case, and with his help to find the heirs, ”said Svetlana Krasnova.

There are also frequent situations when the owners of other rooms deliberately interfere with neighbors who are selling. Inkom-Nedvizhimost lawyers said that some neighbors sabotage the sale process, disrupt the viewing of the room by a potential buyer, delay preparations for the transaction, or even try to prevent it. For example, they may ignore notifications sent to them or avoid receiving them. They can formally agree to the purchase of the room, and in the future start a correspondence with the seller to agree on the terms of the transaction, so that in the end, under various pretexts, the deal never comes out.