Posted by:S. G. Raja Sekharan
In my search of good investing ideas, here is a special deal from one of my friends in Wayanad - a resort owner named Raghu. I am happy to share it with you. The scheme is as follows:
1. Raghu is building a resort with appx 30 rooms, a few villas and club house in a river facing property just 700 meters from a town called Panamaram in Wayanad. I have seen the location and I think it is a good one for a resort – but recommend that you also see it for yourself.
2. Raghu will own 25% of the property himself – which means he has his own skin in the game.
3. You can choose to invest either Rs. 10L or 13 lacs for two kinds of rooms in his resort (river facing and club facing) – for this amount, you will be the owner of a particular room of appx 400 sq ft built up space in the resort.
4. This Rs. 10L or 13 lac is not to be paid upfront – payment terms are 10% upfront and balance in 30 equal monthly instalments ( 39K per month and 30K per month for the two different rooms)
5. The resort construction will start in a few months and will get ready in around 36 months.
6. Once the resort starts functioning, it is expected to take two years to stabilize and turn profitable (this is a conservative estimate, I think it will be faster) – during this period, Raghu is committing a 5% return per annum.
7. Post this period, there will be profit sharing – the resort will have revenue not just through room rent – but also through other services like food – each room owner will get his/her proportionate share of profits of the resort.
8. At a conservative 30% occupancy level and with very conservative room rents of around Rs 2000 per night (in 2020, this is very attractive room rent) – the resort will be profitable and it is expected to fetch 10% returns per annum conservatively -the detailed calculations are with Raghu.
9. Plus you can also utilize the resort for your own stay for 20 days per year free of cost – these details also are with Raghu.
I am recommending this proposal because:
1. I know the promoter Raghu since 2007-08 and have had excellent dealings with him – he is smart, honest and hardworking.
2. He has run a resort in Wayanad for five plus years and he has the experience required to succeed.
3. The location is a good location for a resort and should appreciate in value as it is very close to a key town in the district.
4. The pricing is good and fair and the payment terms are reasonable as he needs the money for construction over time.
5. If managed well, the rentals will go up in the future and over time it will be a good property to own – and I believe that Raghu will manage the property well.
The key risk that I see is if the resort does not do well financially for reasons that we cannot envisage right now - this is a business risk that any business carries. I would recommend that you visit Wayanad, meet Raghu and see the site and do your ground work.
In case you want more details – please write to Raghu directly at “ firstname.lastname@example.org” or call him at 09995551133. He will be happy to share with you all the details.
There is one key disclaimer from me – I am not investing in this scheme because I do not want any more passive income - but I recommend it wholeheartedly for all my readers.