My family has been living in a condo unit since 2012. We made this conscious decision since it turned out to be cheaper than buying a house (cheaper to own and rent one) and the location was great (at least for the choices that were presented to us). The reason why real estate investing is popular is because of the fact that there is a huge market of buyers. In business, we call this the target addressable market (TAM). The bigger the TAM is, the better for the business, since you have an ocean of paying customers whose need needs to be addressed.
In recent years, a new trend and investment option in real estate investing has been widely talked about, considered and jumped into by both experienced and new investors. It’s called Condotel Investing. And this form of investment has quickly gained popularity due to the fact that this opportunity promises passive income.
Since I know that a lot of you, my dear readers, are looking for a safe haven on where to invest your hard – earned money, I took it upon myself to study condotel investing. I took a closer look at investing in Hotel 101, condotels from DoubleDragon Properties Corp.
Before we jump into it, I’m sharing this investment checklist that you can use to assess different kinds of investment opportunities. Left 3 blanks at the end, just in case you want to add more factors and questions.
Together, let’s go through assessing Hotel 101 as an investment opportunity. In looking for a good investment, let’s go through the things that you need to check.
Who is behind this business? How is the company doing?
For those who don’t know much about real estate investing (and I for one didn’t know this until I researched about it), Hotel 101 was developed by Hotel of Asia, Inc. which is a subsidiary of DoubleDragon Properties Corp. DoubleDragon Properties Corp. may have rung a bell for you since they are 35% owned by Jollibee (Honeystar Holdings Corporation; the Tan & Ang Families), 35% by Injap Investments Inc. (made their name when they established Mang Inasal) and 30% by the public (since they are a publicly listed company).
They also have other projects like CityMall, DoubleDragon Plaza, CentralHub, etc. They have assets worth Php 113.55 Billion with 37% year on year growth from 2018 to 2019. With the information that we have gathered, it looks like a stable company that’s far from folding and bankruptcy.
What is the investment vehicle? What is Hotel 101?
Hotel 101 is a brand of condotels of DoubleDragon Properties Corp. which offers a simple and hassle free investment. Basically, investing in condotels is like investing in your own condominium unit, without the hassle of looking for people who will rent the place. It being a “hotel” comes into play, because Hotel 101 has a full-service staff, housekeeping (so you or the customer/renter need not worry about cleaning the unit), concierge services and amenities that guests can share.
Now comparing Hotel 101 with other condotels, the former does not charge the investor maintenance costs, repair costs and association dues. With Hotel 101, the property developer takes care of all the operating expenses, unit repairs and maintenance.
Also, Hotel 101 has project locations nationwide. Hotel 101 – Manila is operational. Hotel 101 – Fort and Hotel 101 – Davao will be completed in 2021. They will also have projects in Boracay, Cebu, Bohol, Palawan and Libis.
How much do I need to Invest?
Since we are in the aspect of comparing, I love how simple it is to invest in Hotel 101. First of all, they have just one size for the Happy Room which is 21 square meters. All of the investors invest in the same size of unit. Other condotels have different sizes so it’s hard to monitor and track your revenue. Different computations make investing harder to understand for the beginner investor. Having one room size also allows all unit owners to own an equal share in the hotel revenues, so income share is distributed equally across unit owners regardless of whether their actual unit was used that month.
These are the four different payment schemes for Hotel 101, specifically for Fort. If the four payment schemes are hard to read, feel free to email Hotel 101 at firstname.lastname@example.org.
In comparing it to 10 year Government Bond yields, you will see that the yield is significantly higher.
How do I invest and how do I Earn?
When you invest in Hotel 101, it’s just like purchasing your very own condo unit, and Hotel 101 takes care of the rest. The property developer looks for people who will rent out the unit. They will take care of maintaining the unit, upkeep and making sure that the unit is clean and sanitized.
What’s nice about it is that you can also transact and make the investment from your home. You need not meet frequently with the property developer, as how it usually is when you purchase a condo unit. It’s really hassle free; you can invest while in the comforts of your own home.
How much is the return on my investment?
These figures below are approximate projections based on assumed figures for Hotel 101 – Fort. Occupancy rate is basically how much of the units are occupied by renters / customers. And just to give you an idea, Hotel 101 – Manila (current project) had an 89% occupancy rate last 2019 and 82.53% in the first half of 2020 (BPO companies would rent rooms for their employees to keep them safe and so that they don’t need to travel).
It’s very important to note that Hotel 101 also bases revenue share on the Gross Room Revenue and not on the Net Room Revenue. Be sure you check on this also when you’re seriously looking at condotel investing. The gross and net amount can make a huge difference on your projected or target return.
So checking on the location of the condotel investment (with any property in real estate investing) is crucial, because you need to foresee what the occupancy rate will be. For the two new projects of Hotel 101 in Fort and Davao, you can check out their website Hotel 101 to ask for more information.
I personally have seen the location of these two projects and these are good locations for condotels.
And in terms of Return on Investment or ROI, you will always have an annual return for as long as the hotel is operational. What varies is the rate of return. With Hotel 101, you will also be given 10 FREE nights to stay in the hotel and enjoy the amenities. It’s good to use it and test it out, too, so that you can give constructive feedback to the property developers. The 10 free nights compose of 5 free stay vouchers to be used in the project where the unit is located and the other 5 free stay vouchers can be used in any Hotel 101 anytime you wish, subject to room availability for free voucher use. Comparing it to other condotels, the others give out 15 free nights, but you can’t use it on peak days.
Revenue is also paid out every month! Can you believe that? For other projects, they only distribute revenue share annually or quarterly.
Aside from that Unit owners receive 30% of Gross Room Revenue every 16th day of the succeeding month, and the 30% of Gross Room Revenue is divided equally among unit owners, regardless if their unit was used (unlike traditional rentals).
What do you need to continuously check?
In my opinion, if in your investment plan, you plan to invest in vehicles that need not require too much attention, investing in Hotel 101 is a good investment. I think the things that you need to monitor are (1) news about DoubleDragon Properties Corp. and Hotel 101; and (2) ask about Occupancy Rate every so often.
The reason why you need to monitor news about Hotel 101 is because branding and a good reputation matters to the end consumers. How they keep their units clean and sanitized, what are they doing to protect the safety of all renters, etc. matter to people especially during these times.
They say that those who become successful during times of recession are those who can spot good investments. Investing in condotels, specifically in Hotel 101, is something that you may want to consider. It’s simple to understand. Investing in Hotel 101 also doesn’t require much effort so you can focus on spending time with your family while earning passive income.
If you have more questions about real estate investing, particularly this investment, you can reach them at:
Website: Hotel 101
Email Address: email@example.com