Novel idea from RBS

Mrs_pbradley936

I was on the London tube at the weekend and saw a poster from Royal Bank of Scotland advertising a buy to let hotel room scheme that was SIPP OK. Anyone know anything about it?

mystic_trev

SIPP OK it might be, but who in their right mind would want to invest in one of these 'schemes'
The other thing is that you would not be able to benefit from an 'investor room allowence' due to it being in a Pension wrapper.
IMHO

Biggles

I was reading something about these at the weekend (I didn't see a SIPP reference but these may know something about it).

http://www.guestinvest.com/
http://www.ownerhotel.com

Mrs_pbradley936

Many thanks Biggles - it was guest invest that I saw advertised. Now then is it a good investment?

nobblyned

Mrs_pbradley936 wrote: »

it was guest invest that I saw advertised. Now then is it a good investment?

It strikes me as possibly one of the worst investments I've ever seen.

They advertise a guaranteed 6% return. A good savings account will give you the same.

The investment would be at best described as illiquid, where is the market for secondhand hotel rooms? how could you guarantee you would get your capital back when you come to sell? This could be like timeshares all over again, with secondhand units going for a fraction of the purchase cost.

As the owner of the room I guess you will be liable for refurb costs somewhere down the line, these could be expensive. You would need to be very careful with what you were liable for under the terms of the contract. For example I guess servicing costs are built into the contract - could these be increased at rates above inflation?

OK, maybe I exagerate about it being the worst investment I've every seen, but I see very little upside, and plenty of downside risk.

My bargepole will be staying firmly in its 10 foot carrying case.

Mrs_pbradley936

Will not putting any money there then!

nobblyned

Mrs_pbradley936 wrote: »

Will not putting any money there then!

Only my opinion of course!

I get a lot of time to think about those adverts on the morning commute!

mystic_trev

These kind of Investments are about as safe as other recent ones that have been plugged in the past few years as 'dead certs' Anyone remember Ostrich farms or Scotch whisky?

Biggles

nobblyned wrote: »

They advertise a guaranteed 6% return. A good savings account will give you the same.

The investment would be at best described as illiquid, where is the market for secondhand hotel rooms? how could you guarantee you would get your capital back when you come to sell? This could be like timeshares all over again, with secondhand units going for a fraction of the purchase cost.

As the owner of the room I guess you will be liable for refurb costs somewhere down the line, these could be expensive. You would need to be very careful with what you were liable for under the terms of the contract. For example I guess servicing costs are built into the contract - could these be increased at rates above inflation?

I wouldn't rule them out quite so sweepingly, though personally I'm not looking to invest that amount of money at one go. It could well be more interesting if it were in an area I was likely to want to visit frequently and could make good use of my free 52 nights stay.

They say there is a 6.5% to 7% net return (that's covering a period during which, not so long ago, savings accounts were at one time below 5%) and in addition those who have sold have apparently achieved 10% capital appreciation on their purchase price. It's commercial property, I'm not sure the 'secondhand' analogy applies here. And if they were that illiquid, they wouldn't have sold most of the rooms already.

The return is net, there are no maintenance charges to come out of that.

And it seems it is SIPP-able.

BTW (after having a look at the original post) if I were interested, I would go direct, not through RBS or any other intermediary who would want to take a cut.