Hotel
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What do investor think of Guaranteed Rental Return for hotel suites ? Especially those that are already built and operational.

Cheers

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My dad used to invest in Resort Suites above Pyramid Tower at Bandar Sunway. The return was so hopeless and horrible that he sold it off. Initially, when he was still considering, they promised a positive and healthy ROI, but that didn't quite happen.

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Isnt there supposed to be compensation for violating the returns as signed in the contract?

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Well, no. Because there were some returns but not good enough. It was really low the returns and it wasn't worth it. I don't remember what was the return amount though, I'll have to ask him.

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Sorry, I'm quite new to all these property / real estate jargon. What exactly is a 'GRR'? Is it similar to monthly rental income from renting out, say, apartment units?

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@Sheu Quen, it's Guaranteed Rental Return as mentioned by Chris

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@Sheu, is a fixed monthly income, no need to find tenants, hassle free for as long as GRR is provided. @Mag, For the case i encounter with the owner, they are reaping fixed profit from the hotel management so far (net 6-7%) & still getting the same fixed sum. In fact, I am thinking to get one. =D

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@Chris Lee, which one are you planning to get? What about those like G Residences where it's catered for student with GRR? Are the returns better?

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@Mag, is the hotel suites at Dua Sentral, brickfields. KL Sentral got so much offices & many are still coming up.

Not sure about G residences though. For Dua Sentral, is hotel suites.. So is day to day rental, but is managed by Best Western entirely.. no hassle on investor..Still have 6-7 years of GRR also..

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@Chris Lee, how much is Dua Sentral?

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The hotel suites that I have is asking for RM910k for 2 rooms unit, 912 sqft, 7% GRR ( around RM5200 nett per month)

620k for 1 room unit, 577 sqft. 6%++ GRR ( around RM3200 nett per month)

Thinking of getting the smaller unit =D

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Hmmmm.... So, is the monthly return a fix amount guaranteed to you or based on occupancy of the hotel for that month? Because if it's guaranteed fix amount, what if hotel is not doing well for that month? They will still have to pay the owners? Because with Resort Suites back then, why my dad did not get a good return was because hotel was doing really bad in terms of occupancy.

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Is fixed amount regardless of the occupancy rate. It seemed, with just occupancy rate of 40% or more, they already profiting.

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Sounds good :)

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There's a lots of consideration elements need to put in place rather how good the package is. Such as :

- lease number of years.
- fix % or floating % (certain fix for 1st few years, floating % when come to renew)
- who is manage the project.
- project target lease customer. to student? walk in?
- who bear the maintainance fee.
- whose responsible on repair & replace the broken fitting & furniture.
- got future selling market @ value ?
- who u target to sell to when u wanna sell? how much as the new taker of your unit can make profit?

many more elements XD

I handle this kind GRR project before and the above mentioned elements is question to me last time. hahaha

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I have read up on GRR a bit before, I'm not very sure about this, but I heard that some property gurus have condemned places with GRR before. Don't ask me where I read this because I can't remember, but I'm just saying.

Apparently they say that if the place is so good, why do they have to give GRR. And secondly they mention that the GRR rates have actually already been charged back to the tenants in the purchase fee actually and anyway. That's why they can afford to give GRR.

I'm really not sure la, as I said, I'm just saying. But I saw somewhere where someone gave a really long calculation which in the end showed that it wasn't worth it. Something like that. @_@

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I personally find GRR on hotel suite do still make sense as they are running on daily rated rental , which will be much much higher return than Residential condo which rely on monthly rental .

Maybe i could be wrong but with simple math , a hotel suite unit at 1000psf - 500sf will cost Rm500k . The operator guaranteed an 6% return will need to generate a sales of Rm30k a year which mean the room at 50% occupying rate - the room have to sell Rm166 per night minimum . Anything he charges extra is profit . And i have just browse at agoda and none of the hotel at 4 star and above near PJ or KL is renting Rm166 or below . And all hotel (if doing well ) shall be able to hit 70% occupying rate .

However , i still agreed with Johnson on resell value . Location does matter . Operator as well .

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Anyone is familiar with Empire Subang? worth investing?

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Empire Subang kah? Need to do some homework on research the market price and market rental.

Anyway, i'm getting a new GRR project by international reputable brand hotel very soon. This project offer a buy back guarantee scheme that most likely prefer for investor as to have an EXIT PLAN.

Wait for finalize details then i will open a new topic to share the ideas then.

Stay tuned :)

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Anyone know which project make grr successful?

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May I know which project make GRR scheme successful in the past?

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Pls share when u get it. TQ.

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GRR are often already included into the selling price. Meh.

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Contact +6017-7577640 for 6% GRR in services apartment / hotel suites now! Project will only launching at 18th of October, choose your favorite unit with RM10k booking only!

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The Lexis, PD...by KL Metro...(hearsay)

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Honestly, people can say anything when it comes to guaranteed return, but the problem is the nature of the business. Hotel business is very much seasonal. And it can't guarantee a steady ROI. Even if people say "I guarantee you" it means little. You're better off buying a studio unit and turning it into an AirB&B unit.

Regards,
Larry (0173785335)

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@larryclockone, I agree with you!

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Its because you not clear how they work on the guaranteed return. Hotel business is seasonal but you can get 9 to 12 months season from all over the world. Not just local. They are signed up contract with travel agencies from other countries and make sure that have certain trip from that particular agency. Its will Guaranteed let you earn every single month no matter the unit you bought is empty or occupy and its stated in agreement. That is call " Guaranteed " . Not " Can said anything ".
Know their term, understand what plan they are offering before you take it.

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Usually these type of GRR model, what does the developer or management get in return? Certain fees or percentage? Have to give certain percentage back from the returns? What is the benefit of buying property on GRR?

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@yunsyn, last time my dad bought Sunway Resort Suites and they guarantee certain percentage of occupancy too, but in the end it was so bad, almost got nothing back. It was one of the worse piece of investment ever. Don't think he profited anything at all and sold it after few years.

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Not sure what inside the agreement between your father with that developer. The guarantee i mean is clearly put inside the agreement. Which mean if they dont give what they promise as in agreement then you can sue them. That's is why we need agreement.
That might be few scenario inside the agreement.
1. Hotel have profit only share, no profit no share.
2. Your unit have profit only share, other unit have profit also wont share with you.
3. GUARANTEE have certain amount return back to you no matter they can rent out or not.
So batter check clearly and careful before buying. That is some developer very successful in this GRR business with no cheating and both side win win earn money.

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@hayden, Developer use your unit to rent out to earn money.
Your monthly installment and everything is RM2000, developer rent out RM2500, they give back your RM2200 and they earn RM300. Something like that for basic understanding.

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As many property gurus mention stay away from GRR. I bought a GRR in 2008. The first two years was fine paid every quarter then 3rd year they could not pay due to economic conditions. Right now a bunch of us are suing the developer. The good thing is we have an air tight agreement we will win but the process of hiring a lawyer, the meetings with the group is time consuming. Even then the whole process may take 2 years before we see our money back and we have to keep paying the bank our installments :(

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Oh yikes, which property is this, @zainalzikri?

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It was a Best Western Hotel in Sandakan. Due to the kidnappings last year. Tourist arrivals went down to zero leading to developer unable to pay the GRR.

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@zainalzikri, I am sorry to hear that. Let's hope there's a solution for you soon.

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Can u reveal the name of the project that is launching on 18 Oct?

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Ramada Resort located at Lumut. IF you are interested and wanna get more information, please do not hesitate to contact MJ +6017-7577640 TQ

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There is another project launching too with GRR package of 6%. Email me or apps me if u want more information at 0129236323.

Cheers

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