Becoming increasingly popular the purchase of foreign properties, bringing incomes and as a result we have a lot of inquiries regarding the acquisition of hotels in Spain (in the Canaries). What are nuances of this type of investment, what is the minimum budget required, what profitability can you expect? You can always get answers to these and other important questions from specialists of our agency “House Tenerife”. But the fact that buying acting hotel for renovation on the island of Tenerife is an incredibly profitable investment, which does not require an explanation of a specialist. It is evident to any investor. However, experienced businessmen are aware of that really interesting investment offers rarely appear on property market. And you would not find these offers with advertisement “FOR SALE”, they are “ONLY FOR SPECIAL CLIENTS”. Today, we can offer interested clients exactly this option. We propose you one of the exclusive hotels for sale from our catalogue.
We are pleased to offer you 3-star Hotel for renovation on the northern coast of Tenerife. The hotel is located in Puerto de la Cruz (province of Santa Cruz de Tenerife), about 2 km from the beach.
The total area of land plot is 16,000 m2. Beautiful territory with a large garden planted with subtropical trees and bushes, sunny terraces around a large central pool. A stunning view from the terraces and rooms overlooks the Teide Mountains. You will definitely enjoy this hotel.
What is profit can bring this hotel to the owner? It is important to distinguish two types of profitability:
1) Rent / operating income. Rental profitability is calculated as the ratio of current income (for example, income from renting a hotel to the Management Company) generated by property to the value of this object.
2) Return on investment. ROI (or Return On Capital Employed) is the ratio of the net profit generated by property to the invested capital (own funds).
The fact is that this property can be bought both for own funds, and with low interest rate for loan of any Spanish bank. In the case of borrowing a loan to buy a hotel, 30-50% of own funds will be enough.
Therefore, it is extremely important to distinguish between the concepts of “rental profitability” and “return on investment”, as long-term credit allows the investor to significantly improve the cost-effectiveness of investment.
Four-storey hotel has 120 rooms:
– 100 standard twin rooms;
– 8 singles rooms;
– 11 junior suites;
– one studio.