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 Income Related FAQs 
for Starlit Suites

Category 1 of 4

This section of Starlit Suites FAQs covers income related questions and if after going through this section, you do not find answers to your queries or need more clarity on other aspects of this investment, we highly recommend you view our 3 other categories of FAQs as listed on the main FAQ page as doing so will give you tremendous confidence and belief in this unique investment asset in India.

If you still cannot find answers to your questions from this section, please feel free to contact us (click here for contact details) and we will be glad to answer the same.

Question 1

Is the monthly income guaranteed?
Is there a minimum guaranteed rent that will be paid to me? If not, why is it so?
What is the guarantee that operator will have enough business and what if there is no demand for his rooms at all?

In Starlit Suites, you earn income on the basis of a 50:50 gross revenue sharing agreement with the operator. That is, of the total gross revenue generated by the entire building every month (i.e. total income BEFORE any expenses are deducted by the operator), you and all the other investors of the hotel apartment are given a 50% share of such an income. (however during the first 2 years of operations, income will be shared in a 60:40 ratio, which is 60% to operator and 40% to you (the investor) as operator will incur heavy expenditure to conduct trial operations of each and every room in the first few months and slowly increase the occupancy over a few months time period by accepting an increasing number of guests every month to ensure that all building systems and staff are able to cope up in a stable and controlled manner).

Therefore, while technically, income from Starlit Suites is NOT GUARANTEED and there is NO MINIMUM GUARANTEED amount that will be paid to you every month, the business model is designed in such a way that you can take it for granted or assume as guaranteed income due to the following reasons : 

  • Incase of a normal hotel or serviced apartment where you first construct the building and then hope and pray that people will come and stay, there is no way to predict how much you will earn and or whether or not you will earn a consistent income.
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  • But incase of Starlit Suites, you know you will earn stable and predictable income because the operator has already locked-in demand in advance based on his tie-ups with corporates and international reach through associate operators and travel agents and operator knows how many rooms he can sell per month for the next 20 years and at what rate he can expect to sell each room night.
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  • This is possible because the operator has relationships with over 200+ companies, including India’s top IT firms and leading MNCs across all industries such as IT, manufacturing, pharmaceuticals, banking and financial services, etc and other such major guest centric industries such as hospitals, event managers, etc and operator has infact signed formal rate contracts with many of them and these relationships / rate contracts give operator assured business every year for the next 20 years, as employees of all above companies will end up staying in Starlit Suites hotel apartments whenever they travel on work and reasons for which are given below.
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  • For example, if a HCL employee travels from Hyderabad to Bangalore on work, he HAS to stay in Starlit Suites and cannot stay at any other hotel as his company (HCL) has a rate contract with Starlit Suites.
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  • By tying up with Starlit Suites, both the company (HCL) and its employees are happy because : 
    • Company is saving money because Starlit Suites costs almost 40% to 50% less than a 4 or 5 star hotel but provides almost all the amenities that most corporate travellers / businessmen would need. With continuous thrust to increase efficiencies and reduce costs, corporates are increasingly adopting these “extended stay corporate hotel apartments”  to cut cost WITHOUT compromising on comfort of their employees; and
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    • Employees also enjoy their stay as they are staying in a large and well-equipped studio / 1 BHK or 2 BHK apartment which is a lot bigger and comfortable than a typical hotel room which is just 200 sft in size on average. Since these employees travel for long periods (on average, they stay for anywhere from 4 to 7 days at minimum and going upto 6 months at a stretch in some cases), such larger rooms in these hotel apartments are lot more preferable than typical hotel rooms which are much smaller and suitable only for short stays.
  • Most of the hotels today depend on tourists / seasonal travellers who may drastically cut down or completely stop travelling all of a sudden (specially when there is a downturn in economy / economy is not doing well) and hence earnings of such hotels are completely unpredictable and unsafe.
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  • However, incase of Starlit Suites, the operator depends ENTIRELY or MOSTLY on corporate travellers who will travel throughout the year irrespective of state of economy and hence in these hotel apartments, you can earn stable and predictable income.
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  • Infact in times when economy is not doing well, corporates will still have to travel and instead of staying in star hotels, they will prefer to stay in these hotel apartments as they can save money this way (i.e. whereas a Taj or Oberoi would have charged you Rs.10,000 a room night, Starlit Suites would charge you just Rs.5000 for the same but with almost 80% of the ambience of a star hotel). This way, companies would be more than happy to stay in such economical place – which means that business for these hotel apartments is also well protected from any temporary downswings in economy.
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  • CONSERVATIVE ROOM TARIFF
    • You may have noticed in the income projection that the operator (Starlit) is planning to charge just Rs._______(check the average room rate being charged by this operator for the 1st year of operations from the income projection sheet at the end of the offer document)_____ per room night which is the average room tariff for a Studio / 1 BHK / 2 BHK (as applicable) rooms put together.
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    • The operator is planning to charge the above rate AFTER few years / months from today (i.e. at the time of commencement of operations which is a few months to years away depending on your location of choice & you can find this information in the offer document) and hence you can take it for granted that operator will have no issues in achieving that average rate.
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    • Infact, when you check the current rates being charged as of TODAY by any comparable 3 star hotel in the surroundings of this Starlit Suites hotel apartment (you can check this via online hotel booking / travel portals instantly), you will realise that the room rate that operator plans to charge as above after a few months / years will be in most cases, lower than the average room rent being charged by comparable hotels as of TODAY.
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    • Which in turn means that Starlit Suites will easily and comfortably be cheaper / lower priced than comparable hotels in the surroundings.
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    • When you compare the existing rate being charged by comparable hotels in the vicinity with what the operator (Starlit Suites) is planning to charge after a few months / years from now (refer the offer document to know the numbers of months/years left for operations & income to begin), you will be very convinced that the operator is charging a very competitive rate due to which he will get assured business and even on the basis of even such a competitive rate, you as an investor will still end up earning 10% to 12% ROI per annum.
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  • CONSERVATIVE ESTIMATE ASSUMING ONLY 70% OCCUPANCY
    • The projected revenues in our offer document are based on / assuming a very conservative occupancy of ONLY 70% THROUGHOUT the life of the building (and not based on unrealistic and misleading figures of 90% to 100% occupancy just to attract more investors etc).
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    • There are times when building will be 100% occupied during peak season and there will be times when building is only 50% to 60% occupied, thus comfortably achieving an average minimum occupancy rate of 70%.
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    • The operator has thus taken a very conservative average occupancy of just 70% for the next 20 years (i.e. the entire lease period) and on the basis of this very conservative estimate, he is confident that you will earn 10% to 12% ROI per annum in beginning years and this will go all the way upto 20% ROI per annum in 15 years time.
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    • Hence in reality, if actual average occupancy is higher than the projected 70% even by a small margin, you will end up earning lot more than just 10% to 12% ROI per annum.
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  • PAN INDIA OPERATOR / NATIONAL BRAND
    • This hotel apartment operator is today present at 8 locations and will eventually operate close to 5000 to 6000 rooms across 32 key Tier 1 and Tier 2 cities of India (right now, operations/construction is in various states of progress at 10 cities and operator plans to open bookings at 1 new location every 3 months, taking the total number of Starlit Suites hotel apartments on sale to 15 by 2017).
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    • This is a big strength to the operator as corporate clients would be more happy to tie-up with ONE SINGLE VENDOR who can given them rooms across 32 top locations of India instead of dealing with individual vendors in 32 different cities.
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    • This is another big reason why corporates would love to work with such vendors and do consistent business in the long run as it is a win-win for both.
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    • Can you imagine Taj Hotels, Oberoi, Hyatt, Westin or Marriott completely shutting down their hotels across India because they ran out of business? It’s impossible because the business is designed in such a way that they will never completely run out of demand for rooms and they are also well equipped to deal with periods of low demand also.
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  • OPERATOR MAKES MONEY ONLY WHEN INVESTORS MAKE MONEY
    • Because this is a 50:50 revenue sharing agreement, the operator makes money only when investors make money.
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    • In addition to this, the operator breaks even only when he (and in turn the investors) earns atleast 8% returns or more per annum.
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    • Therefore, the operator has the biggest incentive to ensure that building is earning maximum possible revenue as the more you (i.e. investors) earn, the more he earns too.
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    • And being a profit oriented business, operator will never be satisfied with just breaking even and will want to earn highest possible returns, which in turn means that investors will also earn the highest possible returns from that building.
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  • DEGREE OF RISK
    • The only degree of risk or unpredictability in this investment or the only thing that can go wrong in this investment is that if everything collapses and goes wrong, you will end up earning 7% to 8% returns for a few months instead of the 10% to 12% until things get back to normalcy.
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    • But this is anyday better than the 2.5% to 3% that you can earn from a normal residential apartment.
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  • AS INVESTORS, YOU EITHER EARN MONTHLY INCOME OR DONT EARN ANYTHING BUT THE OPERATOR EITHER EARNS MONTHLY INCOME OR LOSES  MONEY
    • As an investor, you own a unit that will continue to appreciate over time.
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    • Because you are not involved in managing the hotel apartment, you either earn monthly income (if operator performs well) or you don’t earn anything, but you don’t lose anything either because you are not contributing to the expenses of running the tower.
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    • But the operator is paying salaries, electricity, water and incurring multiple other heavy expenses every month irrespective of how much he earns.
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    • Therefore, he either earns a profit or ends up losing money.
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    • He also incurs heavy expenditure to kickstart each hotel apartment (trial operations, hiring and training staff in advance, applying for licences, etc) before he can even earn a single rupee.
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    • Hence the operator would never get involved in a tower where he is not confident of making at least 10% to 12% per annum as otherwise, it is simply not worth his time and financial risk involved.
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    • He is going through all of this because he is VERY CONFIDENT of running a hotel at 70%+ occupancy and earn a healthy profit out of it.
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    • Hence, you as investors can also be rest assured that operator will always have sufficient business for the 20 year lease period (which is further renewed for multiples of 5 years, thereafter).

Therefore, you can safely assume and infact take it for granted that your actual income will be atleast equal to or in most cases, more than the projected income as per the offer document.

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Question 2

What happens if the operator loses interest in the building and decides to cancel the lease and walk out of the property?

For reasons explained above, operator would never get involved in a location where he is not very confident of operating at more than 70% occupancy on average for the next 20 years as otherwise it would not make business sense for him to get involved.

But for argument’s sake if the operator were to somehow lose interest in the tower and decide to end his lease and walk away / abandon the building, you as investors have the following options :

OPTION 1
Get Another Hotel Operator to Take Over the Tower

  • There are a large number of 3/4 star hotel operators who would gladly take up this tower and run it under their brand as there is tremendous scope for such extended stay properties across India but very few players who are catering to such demand.
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  • Because this tower is ready and functional, the new operator will gladly take over and start running the same from the very next day and in this case, you will still continue to earn high monthly income like originally planned.

OPTION 2
Rent The Units Individually

  • Investors can take back possession of their individual units and since these are fully furnished, fully air-conditioned units in a tower designed as a 2 / 3 star hotel with amenities such as banquet rooms, restaurant and bar, swimming pools, laundromats, and much more, and because these towers are located in very dense and highly trafficked IT / business hubs of top cities of India, you can easily rent them out to individuals for atleast 5% to 6% returns per annum which is double the 2.5% to 3% that you can earn through normal residential apartments.
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  • There is a massive number of working bachelors / bachelorettes and newly married couples who would keep shifting cities every few years and who would prefer to stay in a compact yet fully furnished and air-conditioned home instead of renting out a large 2 or 3 BHK which they will not only have to furnish themselves but also under utilize most of the space that they don’t need but have no option but to take because of the flat size.

Hence, even for arguments sake if you were to assume that operator will walk away from this tower, you still have 2 very good alternatives that will fetch you returns that are anyday better than 2.5% to 3% returns from a normal residential unit.

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Question 3

Since operator is NOT committing a minimum guaranteed rental every month, I don’t think this is a lucrative or safe investment. Why should I invest if there is no such guarantee?

  • The maximum returns you can earn today from an investment that can give guaranteed returns is 8% (the highest possible rate of interest for a long term Fixed Deposit).
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  • In such investments that give you guaranteed returns, your returns are fixed at a comparatively low rate and your money remains locked in for a very long time and there are also no tax benefits. Also, you get fixed returns in these investments and there is no scope of earning more than this fixed rate.
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  • The capital value of such investments also remains the same or appreciates at a very low rate, when compared to Starlit Suites in which capital values appreciate significantly every year.
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  • Lastly, if you try to exit these investments before the original maturity date, then you are charged a huge penalty or loss of ROI due to reduced returns.
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  • In Starlit Suites, while there is no minimum guaranteed income, you are given 50% share of total income, which means that when the hotel apartment generates greater income, you also earn greater income as you get 50% of that income and there is no upper limit on how much you can get.
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  • Hence even though you are not guaranteed a minimum income, because of the immense potential of the business mode and because the operator has already tied up more than 200 companies who have agreed to purchase room nights in bulk at these hotel apartments, you can be rest assured that your income will easily match or in most cases, even exceed the initial projections of the operator (i.e.Starlit Suites).
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  • Also incase of Starlit Suites, you earn income irrespective of whether your individual unit is rented out or not and hence this is an additional safeguard to ensure that you earn income consistently month after month irrespective of occupancy rate of your unit.
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  • Alternative : However, if you still prefer assets that give guaranteed income, the only other alternative is to invest in Grade A commercial space that can be leased for a fixed rent – on average between 8% to 9% p.a. with some escalation clause every few years. This way, you can expect to earn an average returns of 10% in 10 years. But the investment ticket size in this case is much larger, starting from a minimum of Rs.3 to 5 crores if you want to invest in a branded builder in a good location. You will not get a home loan for this, which means entire investment will have to be funded with your own funds or you will have to take a commercial property loan which charges as much as 13% to 14% interest p.a.
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  • You should also keep in mind that by investing in Starlit Suites, you enjoy the following advantages when compared to investing in such commercial property as explained above :
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    • Greater ROI : In Starlit, you can earn average ROI of as much as 15% to 18% in 10 years versus the 12% to 14% that commercial assets give you.
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    • Home Loan Available : You can get a home loan at just 11% interest rate where upto 60% of property value can be funded via loan. In comparison, in case of
      commercial property, you can fund only upto 50% of property value and interest rate is much higher, ranging from 13% to 14%.
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    • Smaller Ticket Size : In Starlit Suites, ticket sizes start at Rs.30 lakhs making them highly affordable, in comparison to commercial properties which need a minimum investment of Rs.2 crore and more if you want a good property from a branded player in a commercial zone of any major city.
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    • Zero Maintenance for Starlit Suites : Incase of Starlit Suites, entire maintenance is taken care by the operator on your behalf and you don’t spend / pay for the maintenance as it is paid for by the operator. Incase of commercial assets, you have to pay very high maintenance charges and also take care of all the maintenance by yourself.
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  • Therefore when you consider all the above advantages and ultimately higher returns and peace of mind that Starlit Suites gives you, you are much better of investing in Starlit than any other asset, for you to earn high monthly income.

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Question 4

Since income is not guaranteed, what are the RISKS of this investment?

  1. As explained above, while income is not GUARANTEED ON PAPER, you can take it for granted that your actual income will easily match or in many cases, exceed the initial projections shown in the offer document.
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  2. Since we work only with the top brands of the country, your capital or initial investment is 101% safe.
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  3. The only RISK is in the PERCENTAGE of ROI that you earn. That is, in some situations, you may end up earning only 8% to 10% per annum whereas as per initial projections, you should have earned atleast 12% per annum.
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  4. But such differences in income will only be temporary and only in rare circumstances as in the long run, your average ROI will be equal to or greater than the initial projections.
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  5. In other words, the only risk is that you may earn less income that what the operator has initially projected. But even in such a worst case scenario, you will still earn more than what you can earn by renting out a normal residential property on your own.

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Question 5

Is there a cap / upper limit on the percentage of income for the investor?

  • No, there is no limit on the maximum income that can be paid out to the investors.
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  • The total / gross income generated every month is shared in a 50:50% ratio between operator and the unit owners, irrespective of the amount of income.

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Question 6

Are there any maintenance charges? If yes, how much are they and how will they affect my ROI?

  • As an owner, you are not required to pay any maintenance charges as all expenses incurred in running the hotel apartment are borne by the operator as part of the operational expenses.
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  • However, if the Starlit tower is part of an integrated township or mixed use development where common maintenance is payable for areas outside of Starlit’s operations, then the same will be borne equally by Starlit and the owner (You). However, this has already been factored into the income projections and hence this will not affect your ROI in any manner.
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  • Hence, you do not pay any such maintenance or any other running charges and this does not affect your income / ROI %.

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Question 7

Is there a clause to compensate investors if the operator / Starlit Suites delays commencement of operations / income?
What will ensure that operator begins running the hotel apartment tower as early as possible / without any delay?

Delay in Construction of the Tower by Builder
Generally, if construction of the building is delayed, you will be compensated as per industry norms.

Delay in Commencement of Operations by Operator
There is no reason why operator would delay commencement of the hotel apartments as he is actually LOSING potential revenue for each day of delay in commencement of operations and hence would make all the effort and do everything possible to prepone & start OPERATIONS as early as possible and reasons for this are explained below :

  • The operator has established close and deep relationships with over 200 companies, including many Fortune 500 firms across various sectors. With many of such companies, the operator has also signed RATE CONTRACTS, which guarantee business and ensure sufficient occupancy every year across all the operator’s properties across India which in turn means that investors like you will earn steady, regular and high monthly income.
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  • Since these agreements are always ongoing and renewed continuously, there is no certain START DATE for occupancy at Starlit Suites and business will start as soon as the property is completed and handed over by the builder.
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  • Hence its obvious that operator would want to start bookings/operations as early as possible as there is READY business waiting to be taken and infact if building were to be ready completely by tomorrow, he would start operations right away tomorrow itself!
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  • The operator also invests a heavy amount upfront for working capital, manpower training, licences and initial trial operations even before he can generate his first rupee of income and the only way they can recover this money is by ensuring highest possible occupancy from Day 1 of opening of each property.
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  • Since you are not paying for the day to day operations, you as an investor have nothing to lose if there is no or low occupancy as your property continues to appreciate in value whereas operator is losing his working capital as he has to pay salaries and maintenance, irrespective of whether he is getting income or not. Hence, operator will be more than eager to start operations & maximise occupancy as soon as possible.
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  • Infact just to break-even (reach a point of no-profit no-loss on a day to day basis), the operator needs to reach a level of occupancy where investors earn atleast 9% to 10% returns p.a. and hence operator will be more than eager to achieve the highest returns for both himself and the investors to ensure profitability.
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  • Lastly, Starlit Suites is a PROVEN and SUCCESSFUL business model that is running in 4 cities for last 5 years and hence you can be rest assured that your income will be in line with the projections and occupancy can be taken for granted.

Hence, there is no need for any such clause to ensure occupancy by a certain time period as all the above will push and motivate operator to ensure maximum possible occupancy from Day 1, as he can earn only when you and other investors earn revenue (since this is revenue sharing).

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Question 8

What happens after the 20 years lease expires?

  • At the end of 20 years, the operator and investors come together and mutually negotiate / decide to renew the lease (in multiples of 5 years) at mutually negotiated terms and G&C encourages all investors to invest in this signature tower only if they are looking at monthly income and not for self occupation.
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  • Since all investors have invested with the sole objective of earning high monthly income, they will be more than happy to let the operator continue generating high monthly rental income for them and hence you can safely assume that the lease will continue perennially.

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Question 9

The agreement gives a date when the rent management agreement will commence but not when the payment of rent will commence. Why is it so?

  • As explained in above question, as per the revenue sharing agreement, your rental income will begin as soon as operations commence.
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  • Since occupancy can start ONLY AFTER construction is fully complete and building is handed over by builder, operator cannot MENTION EXACT DATE on which rent will start as this depends on handover of building, which itself can vary by a few weeks here and there.
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  • Hence you can assume that your rental will begin as soon as building is handed over.
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  • And since operator gains by starting occupancy as soon as possible, you can take it for granted that your income will not be delayed at all.

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Question 10

Is there any exit clause for me if under any circumstances, no rent is paid to me over a specified period of time?

  • Firstly, since this is a 50:50 revenue share agreement, the operator makes money ONLY WHEN you (the investor) makes money. Infact, the operator earns the exact same amount that you would earn every month.
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  • Moreover, since operator is investing money to run the hotel and since he bears all the expenses (whereas you as investor are NOT bearing any of the operational expenditure of running the hotel), he will BREAK EVEN ONLY when he earns 9% returns per annum or more and to make a healthy profit, he has to earn more than 12% per annum and more to justify his time and effort invested in running this hotel apartment tower.
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  • Therefore, he will make all efforts possible and go out of his way to ensure that there is enough business every month for him to earn atleast 10% to 12% or more per annum and since you earn the exact amount of rental that he earns every month, the higher the operator earns, the more you too earn as the investor.
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  • Hence, there is a big incentive for the operator to run the hotel at high occupancy and in which case, you always end up earning high and consistent rental income every month.
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  • Keeping all the above in mind, it is impossible that no rent comes to you for a certain month or even for a couple of months as even in the worst of scenarios, you will still end up earning atleast 9% or more per annum, if not the 10% to 12% that is being projected (but even this, if only for argument’s sake).
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  • However, just to give you comfort and protect your interest as an investor, there is a clause in the rental management agreement which states that if the operator fails to pay you atleast Rs.10,000 per month for 3 months consecutively, you can ask him to vacate the premises and hand over your unit back to you. This is your exit clause.
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  • And for argument’s sake if above were to happen and operator exits the building, it is very easy for us to bring in another hotel apartment or hotel operator who would be too glad to take up a fully constructed and operational tower and start operating it right from the very next day and you will continue earning the rental income. Alternatively, you can rent out the units on your own and since these are fully air-conditioned and fully furnished rooms, tenants will queue up outside your door to take them on long term leases, thus giving you enough exit options and highly productive alternate uses for this investment.
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  • But as mentioned before, this is only for arguments sake and since operator has close to 40 years of rich experience in the hospitality industry and already has tie-ups and rate contracts with 200 plus Indian corporates and MNCs across the country (including many Fortune 500 firms), it is highly unlikely that operator will run out of business, that too being a PAN India player and having a property BANG in the heart of Neemrana, right on the Delhi Jaipur Expressway.

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Question 11

After taking so much risk, you are talking about 12% returns per annum. Whereas banks / Fixed Deposits can fetch us 8% interest with safety of principal. For just the additional 4% returns, why should I take a chance of investing in this hotel apartment concept?

While you are correct that bank will give you assured returns of 8% (this is also possible only if you are a senior citizen to qualify for such high interest rates as otherwise normally, banks give you only 4% and FDs fetch you maximum of 7% to 7.5%), this rental income property has a number of advantages that a fixed deposit cannot give you, such as :

  1. This property gives 10% to 12% in the beginning which gradually grows every year and almost doubles to 20% per annum in 15 years time. A fixed deposit on other hand will only give that 7% or 8% returns which will not increase with time.
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  2. This property will appreciate in value over time and will almost double in 8 to 10 years time where as a fixed deposit will NOT grow at all. Hence this investment gives you BOTH rental income AND capital appreciation.
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  3. You can get a home loan (upto 65% of property cost) to invest in this project which means you need to invest only 35% from your pocket and once project is operational, the income will be greater than the EMI you pay on the loan, making this a self sustaining asset. But you cannot borrow money today to invest in fixed deposit.
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  4. While income from Fixed deposit is FULLY TAXABLE and has no tax benefits, this rental income asset gives you tax benefits due to its home loan, which means you pay very less taxes on this property’s rental income.
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  5. Lastly, there is no “breaking our back with full time work and stress” as the investor (you) will NOT at all be involved or required in day to day management of this tower. You simply invest and handover the tower for the next 20 years and sit back and enjoy the regular monthly income. India’s top builder is constructing the tower (hence no construction risks), India’s top corporate hotel apartment operator is going to manage the entire tower on your behalf (hence no work / risk involved in renting out the hotel) and one of India’s top investment advisory firms (our company G&C Global Consortium) is bringing this opportunity to you (making this a tried and tested investment scheme that is already operational in Bangalore and Cochin and under construction in 8 other cities of India).

When you consider all above points, I am sure you will find this a lot more attractive and profitable than a Fixed Deposit or any other form of investment that can give such high, growing monthly income.

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Question 12

Do I get a share of the revenue from all the common areas & facilities such as restaurant, banquet halls, etc?
Why I am not being given a share of the income from all these common facilities even though I am paying for the same?

Firstly, since you (as the investor) are NOT contributing to or bearing the expenses involved in running these facilities (and this is quite a substantial expenditure every month), you should not think about earnings from such facilities.

Secondly, all the common facilities such as restaurant, gymnasium, conference rooms, swimming pool are operated by Starlit on a nominal profit as this is how they are able to remain competitive when compared to other hotels by charging 30% to 40% less than comparable hotels but at the same time, giving people almost the same experience as a 3 star hotel.

  • Facilites such a buffet breakfast, gym and swimming pool are offered complimentary as part of room package and are not charged any extra amounts and hence don’t generate additional revenue.
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  • Banquet rooms and restaurant may generate some revenue but even that is enough to only cover the cost of operations and they may generate small profits which are too small to bother, when compared to the massive revenue from room rentals.
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  • Infact, the operator incurs heavy expenditure every month just to maintain these facilities and this expense is being paid out of operator’s share of the revenue and is not paid by you or shared with you.
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  • Moreover, it is because of these facilities and the low prices being charged that Starlit Suites is able to maintain such high occupancy which is in turn giving you higher rental income every month.

Hence ultimately as the investor, you should only focus on the larger picture, which is earnings from room rentals and not worry about small and insignificant revenue from all other facilities of the building.

Even though you are not getting share of revenue from above facilities, you are still earning 10% to 12% per annum on your investment, which is 3 to 4 times greater than the 2% to 3% that you can earn through normal residential apartments.

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Question 13

Can the monthly income from this asset be paid to my parents even though I am paying for the unit? Are there any implications for the same or additional tax burden?

Yes, you can have the income credited to your parents even though you are paying for the investment provided your parents are also co-owners of the property (i.e. they are required to be formal co-owners of the property along with you in order to be eligible to receive the rental payouts). There is no additional tax burden or implications in this case.

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