Hotels

An alternative option for investors is overseas property. This comes with all the same advantages of investing in domestic property: you’re investing in a tangible asset, which has the ability to deliver lucrative returns which are assured so you’re getting the same amount into your bank account each month.

Arguably the most popular route for overseas property investors is to buy a house, villa or apartment and rent it out privately. Sharing sites such as Airbnb and onefinestay have made this process a lot easier.

But this isn’t the only way. Investing in resorts or hotels is another option.

It’s worth mentioning at this point that the vast majority of overseas property investment is not regulated by the Financial Conduct Authority, so investors should proceed with caution. You’re unlikely to get your money back if something goes wrong.

However, if you do your due diligence, there are good reasons why investing in hotels can make sense.

Firstly, you’re outsourcing the ‘hotel-keeping’ to the experts. Hotels are hands-free and hassle-free compared to private rentals, with a team of marketing experts working to maximise your income alongside their own.

Secondly, hotels are supported by local authorities, while private rentals are being attacked. Major tourist destination countries are clamping down on the ‘sharing economy’ such as Airbnb.

Thirdly, you normally get the chance to stay in the hotel or resort as part of the package or alternatively you can opt-out of the rental agreement & even live there if you wish. These are freehold properties so you own the freehold & therefore have many options going forward.

Finally, seasonality isn’t as big a problem as it is for private rentals as hotels have conference and convention business in the “shoulder” months of October, November, April and May. We’re also looking at resorts in Cape Verde which has very good Winter Sun weather so doesn’t suffer in the same way as the Spanish Costas in the winter months.

There are, of course, risks – besides the fact that you’ll have no protection from the FCA, a fact that shouldn’t be underestimated as the market has traditionally been and remains infested by scammers.

A big concern is most developments are sold off plan, which is inherently riskier than if the property was already built. The biggest threat is the development never gets built and the developer disappears with your money which is why Epic Investments work with The Resort Group, they have a proven track record of delivering resorts & offer investors the opportunity to “try before you buy”.

Like with many of the investment opportunities Epic Investments have to offer, we look to know the scenario from day one. With Resort Group they give an investor 10% return on money invested during the build period, they then give assured return of 5% once the hotel is up & running. If you then have a change in circumstances & wish to sell the investment then the Resort Group make a commitment to market the sale of your property after the initial 5 year period of ownership so the investor knows day one what their options are.

Epic Investments can offer support when it comes to one of the other risks, that currency markets will move against you when transferring money internationally in either direction, so you’ll need to budget for this or “buy a forward contract from a good foreign exchange dealer”, we have contacts who can assist with this.

Other risks include unforeseen local catastrophes, either natural or man-made, and the resort being a failure.

So, the safest bet would be to buy in a resort where a well-known international, luxury chain has signed a long-term deal to manage it.

Cape Verde may look an outlying market and a risky proposition for property investment, but with its developments being managed by one of the most successful five-star hoteliers in the world, Meliá Hotels International, and one with a name to protect, the Resort Group’s investments there look much safer.