Three Revenue Models while investing in Real Estate: Which option suits you the best?
Real estate investment continues to attract those who are looking for long-term profitability. But with multiple approaches available, how do you select the one that meets your future goals??
Let’s explore the most common revenue models, with their pros and cons.
1. Rental income?
This straightforward model involves purchasing a specific hotel room with earning income by renting it out. While it offers potential profitability several key considerations should be taken into account:
Revenue Factors: Occupancy rates depend on factors like: location, view, and average daily rate. However, you’re still?responsible for maintenance costs (utilities, repairs) even if the room is not rented out.
Risks: During the low season income can be unpredictable.?
Management: Active involvement is often required, whether by finding tenants or hiring a management company for an additional fee.
Suitable for investors willing to dedicate time and effort to property management. However, it’s not the best option for those who are? seeking passive income.
2. Guaranteed Income
Under this model, the developer or management company guarantees a fixed income for a set period, such as 3–5 years.
Pros: Stable income without the need of an active property management. It’s an excellent choice for minimising risks.
Cons: Returns are often lower than market rates, rarely exceeding 5-6% annually. In addition, units with guaranteed income are usually priced higher.
Suitable for investors prioritising stability over high returns and seeking minimal involvement.
3. Shared Revenue Income
In this model, revenue from all rooms is pooled into a common fund and distributed proportionally among investors.
How It Works: Instead of owning a specific room, you invest in the entire hotel’s room stock. Revenue from all rooms is combined and distributed based on each investor’s share.
Advantages: Income is generated from the entire pool, there is no need to worry about the occupancy of a specific room.
Cons: Requires reliance on an experienced management company.
Suitable for investors seeking for passive income, hands-off approach with reduced risk.
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Why We Chose the Revenue Pooling System for Pontus Rotana Resort & Spa?
After analysis, we found out that the revenue pooling system is the most profitable and convenient for both our 5-star hotel and our potential partners, Here’s why:
Higher ROI: According to Cushman & Wakefield and our feasibility study, the minimal return on investment (ROI) for the end of 2024 is 12.3%.
Passive Income: Investors enjoy a hands-off experience, with Rotana, a leading hospitality brand in the UAE, managing all operations.
Transparency: Revenue is distributed fairly and transparently, ensuring trust and efficiency.
Conclusion
Your choice of a revenue model depends on your investment goals and level of involvement:
If you enjoy managing your property, choose the first option.?
If stability (guaranteed income) with lower returns suits you, choose the second option.
But if you wish to maximise your capital gain while minimising risks, the Shared Revenue Income structure is the best choice.
Pontus Rotana Resort & Spa combines transparency, high returns, and convenience for investors. We’ve created the fare conditions for you to enjoy a stable income with minimal risks.?
Welcome to the future of real estate investment!?
For further information visit our website Pontus.ge . For exploring more about our project and its benefits :
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Read more about Key Construction and Infrastructure Factors
Read more about Investing in Hotel Rooms: New Horizons for Financial Growth