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Hotel Industry Trouble Affecting Dallas Foreclosure Investing

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By : John Cutts    99 or more times read
People and businesses involved in Dallas foreclosure investing will have to take interest on what’s going on in the city’s hotel industry. According to latest reports, the number of foreclosure filings involving hotels for 2010 has so far exceeded the whole-year number of filings a year ago.

A big number of foreclosure auctions in Texas feature hotels from the Dallas-Fort Worth area. A total of 43 foreclosure filings for hotels and motels have been recorded as of the end of April 2010. This is already higher than the 41 filings in the whole of 2009.

According to real estates analysts, overbuilding and the ongoing recession have played big roles in the foreclosure troubles of hotels. Overfinancing is also believed to have played a role in putting the hotel market in trouble. For investors buying foreclosure properties for sale, this might not be the best time to buy.

Realtors have stated that despite having more properties to choose from, investors who are into Dallas foreclosure investing are not finding foreclosed hotels as good investments. They revealed that not a lot of good properties are being made available to the market.

Furthermore, buying a foreclosed hotel will just leave investors with an unprofitable business, with hotel occupancy dropping to record lows in the area. Brokers have admitted that even lenders do not want to take the foreclosed hotels back because they have no idea what to do with these properties.

Local statistics showed that a total of $2.5 billion were earned from selling hotel properties in 2009. This equals to a 77% decline from 2008 sales volume. The huge decline percentage is expected to be even higher in 2010.

PKF Consulting has released data showing that over a period of three years, rates for hotel rooms have declined by almost seven percent on average. Compared with 2007 records, the current rate decline is about 12%. The consulting firm has added that the hotel industry suffered its worst period in 2009 and that the last time it came close to this situation was during the 1930s.

For businesses involved in Dallas foreclosure investing, the high number of hotel real estate available for foreclosure sale does not present a good investment opportunity. Market observers are seeing hotel properties right now as pieces of junks that will not provide any returns.

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