Acquiring Gastro Properties During a Crisis

Investors are currently finding favorable purchasing opportunities in the real estate sector. Due to COVID-19, numerous hospitality operators must sell their properties. As a result, more and more hotels, restaurants, guesthouses, inns, and other hospitality properties are coming onto the market every day. For institutional investors, as well as private investors, hospitality real estate offers itself as a safe haven. They generate solid returns in the long term and achieve high appreciation – provided the conditions are right. In our hospitality blog, you'll learn what to pay attention to when selecting hospitality properties being sold due to the crisis and during the purchase process.

Why should you buy a hotel or restaurant during the crisis? We have good arguments.

Restaurants couldn't serve guests. The pandemic has plunged the entire hospitality industry into crisis. For many restaurants, hotels, and other hospitality businesses, Corona means the end. Many owners must even sell their hospitality property.

Crisis for Hospitality – Opportunity for Investors

What means great damage for operators and owners of hospitality real estate is an opportunity for investors who have always been waiting to buy a good hospitality property at a particularly favorable price. This applies to institutional investors such as funds as well as private investors. Those who ask the right questions, analyze carefully, and negotiate skillfully can get a real bargain. We've listed the points that matter now when buying a hospitality property.

Buying at the right time means buying in the crisis

Success in investing depends on timing. When real estate investors buy at the right time during a crisis, they benefit threefold: 1. You acquire the hospitality property at a price below its actual value. 2. You secure a secure asset that generates solid returns in the long term. 3. You have the opportunity to profit from significant appreciation. Provided that the building condition, location, catchment area, usage rights, and general development are favorable.

Thorough analysis pays off. Analysis and Selection: Cheap is not the same as good

Analysis and Selection: Cheap is not the same as good

At the latest when the economy recovers, newly minted hospitality real estate owners will see whether their investment has paid off. However, the data from before the crisis or purchase also suggest the potential of the property under normal operations.

Tip: Therefore, don't just focus on the price! Consider exactly the same criteria in your selection as you would under normal circumstances. Conduct a potential analysis based on aspects such as: location, use, concept, etc. Have yourself advised by an experienced hospitality real estate broker. This is the only way to ensure that you don't make a bad investment.

In addition to general success factors such as location, region, catchment area, building condition, usage rights, and any changes, factors that are directly related to the crisis are also important for the long-term orientation of the hospitality property.

Location, Region, Catchment Area, and Other Factors

Tip: Also analyze the reasons that brought the hospitality business being sold into trouble. Was it due to management, concept, equipment? Or does the property itself have disadvantages that could become existentially threatening in the next crisis? If necessary, factor in additional investments that would make the hospitality property more crisis-resistant.

Sustainable Concept and Alternative Usage Rights

Investors should ask themselves whether in a similar crisis, an alternative business concept could be implemented that generates enough revenue even under adverse circumstances and secures your rental or lease income.

Tip: Check: Is a change of use possible? Have this verified – if not already done. This way you're prepared and can pivot if necessary when new circumstances require fundamental change.

Don't waste time on good offers. Speed, Speed! Be quick! Just as important as timing is the pace of investing. There are many good opportunities. Real bargains are not. Whoever spots one must hurry.

Speed, Speed!

Tip: Don't waste time! Review the offer, arrange a viewing of the hospitality property immediately, and have all relevant documents ready. Definitely consult an experienced (crisis-savvy) hospitality broker for the real estate purchase so you don't make any mistakes in the necessary rush that might cost you dearly.

Win-Win Situation in the Crisis

When an investor buys a property from a crisis-stricken hospitality operator at a good price, a win-win situation automatically arises. The investor helps the seller out of their predicament, and he himself can make a good deal. As a rule, negotiations during crises move somewhat faster, as price discovery happens more quickly. Experienced hospitality brokers know where the pain point lies and support you in saving a lot of money.