How and Where to Invest in Rental Properties in The Tourism Industry

The economy has suffered a great deal due to the coronavirus. Investors from around the globe see the unpredictable scenery changing every time scientists promise a new vaccine. Meanwhile, the tourist section is doing horrible, and the prices in this industry have decreased. New opportunities arise regarding the investments there.

With prices being low and uncertainty to the owners, it is the perfect time to make an investment. When Covid-19 is finally eliminated and stops threatening the world’s economy, tourism will eventually go back to normal. Investments mostly have to do with not missing the chance; maybe this is the perfect opportunity for you to show up in the business.

The criteria
So what are the criteria to help us determine where to focus our investments? The apparent argument has to do with how tourism is going in a specific destination. There are places where tourism is going well, and this is a sign that you can play safe. The next one is about the profit you expect to get. The so-called ROI, which is the return on investment, has to be high. For most types of businesses, a 200% ROI is considered to be great.

Last but not least, you always take into account the law restrictions in each country that may determine the result of your investment. To help you get a better perspective on this, let us start with the foreign income tax. You see, resident citizens, non-resident citizens, and resident foreigners are three different categories when it comes to the taxes you have to pay to a country. Check them out in detail to determine which is less costly for you. Additionally, there is the property tax; every property owner has to pay a tax to the country, usually for foreigners, this tax increases. Pay attention to find countries with small property tax and save money. Besides, the foreign buyer tax imposes an extra tax on foreigners to help each country’s economy. Finally, let’s not forget your budget, which will be the main parameter to help you grow faster. The golden rule is to match the travelers’ and the investors’ choices ideally.

Airbnb and short-term rentals seem to have a considerably higher ROI than the long-term ones. Actually, they are three times more profitable for the time being. To become successful and consider yourself an accountable property manager, you need to figure out the details like cleaning service, 24/7 customer service, etc. Appropriate software will be necessary. Right now, the hot seller is Guesty, and lots of businessmen trust it.

A quick glimpse at the market

Focusing on the market, let’s see what’s going on around the globe and if you can find your spot there.

• Sri Lanka: The new-age turn to spiritualism has made Sri Lanka the hotspot for many tourists worldwide. Also, the warm weather makes the place perfect for vacation all year long. This means the property is not going to work as a seasonal product. The numbers speak louder; Sri Lanka attracts around 2.5 million tourists every year.

  

• Thailand: Thailand, and especially Bangkok, is among the top five destinations to invest in the tourist industry. The law regarding land ownership by foreigners is very friendly, and it was listed as one of the most visited destinations in 2017. The audience that chooses this destination is broad. Wealthy and not so wealthy people are likely to visit this place. This is crucial because it gives you liberty on the budget you want to spend when you start your investment.

  

• Mexico: Mexico is an excellent choice for short-term investments. Due to its geography and the connection with the American culture, it is a popular destination for American tourists. The property is cheap, and the minimum wage is quite low. This means that if you need to hire locals to take care of your business, you can pay a reasonable salary.

  

• Portugal: Portugal was the third best city to visit, according to Lonely Planet for 2018. To encourage investments, the government established the  Golden Residency Permit Program, which ensures a lot of benefits for foreign investors. The most affordable properties with a high expected ROI can be purchased in the seaside destination of Algarve with a view of the Atlantic Ocean.

  

Written by Anna Siampani.