Flipping Hotel Room Hot New Investment

By: Elizabeth Esfahani: REALTOR® Magazine Online
The hottest business for real estate flippers these days isn’t starter homes — it’s hotel rooms.

Investors buy individual hotel rooms with a relatively modest capital outlays. The least expensive opportunities are in yet-to-be-built hotels. There’s no upkeep for the finished unit. In addition to being able to stay in their rooms whenever they want, investors make money by leasing out the units to others.

Most hotel operators run services that will match rooms with customers and send a healthy fee to the room owner. James Dubois, a hotel-condo investor in London, says he made a solid 6.7 percent return in the past year on his $410,000 purchase of a room by renting it out through the building's developer, GuestInvest.

The larger payoff can come by investing in rooms in hot locations and hoping they rise in value. Joel Greene, president of Condo Hotel Center, says the big bet is that condo-hotel rooms can be resold to affluent buyers looking for prestigious, no-hassle second or even third residences.