Is $150,000 USD enough to start a travelers hostel? Im sick of my 9-5 grind, have no gf, no mortgage and it's always been a dream to run a hostel. What countries are business friendly, affordable and profitable?
El Salvador looks up and coming and their government is promising
Dont do it anon
Why not anon?
>Is $150,000 USD enough to start a travelers hostel?
>El Salvador
If you want to own the building, probably not. I just did a quick search and found a 10br hotel (really more of a hostel/guesthouse—pretty scruffy) somewhere called Sonsonate on the market for $400K. That would have the advantage, of course, of already being more or less ready to go, with license, etc. already in place. It needs renovation, predictably, but it’s already built as a place to stay.
Near some beach somewhere, so maybe more hostel-friendly, 6br “rancho” with a pool could be yours for $290K: https://m.encuentra24.com/el-salvador-en/real-estate-for-sale-beachfront-homes-and-lots/vendo-rancho-de-playa-segunda-fila-en-san-diego-puerto-la-libertad/23955318?list=category&catslug=real-estate-for-sale-beachfront-homes-and-lots
I did a global search for hostels for sale and the nicest one I found was in Ecuador, on the beach, for $490K. But, again, that would be turnkey, ready to go.
$150K might buy you a big, run-down house that you could convert into a hostel yourself, but it’s going to mean a lot of work plus whatever the business start-up costs are to make it into a functional hostel. It might also buy you the business rights to an established hostel you would then be leasing, such as this place in Colombia (business rights $125K, own the building for $600K: https://hostelmanagement.com/colombia/guatape/happy-buddha-hostel-lodge).
I think this is a fine dream and one worth pursuing. But $150K is hardly any money at all for real estate, even in a cheap country. I encourage you to keep saving for another couple of years.
Thanks for the effort post, anon. Maybe I'll put the fantasy on hold for now
>Thanks for the effort post, anon.
The effort was negligible and well-suited to my ADHD.
>Maybe I'll put the fantasy on hold for now
Or maybe now you start a serious 3-5 year plan, if this is something you’re really interested in. I did fifteen minutes of googling English-language real-estate websites, no research at all into options you might have if you wanted to lease a place, or what the backpacker hospitality market is really like on the ground (I’ve spent a moderate amount of time traveling in Latin America, and I have a passing acquaintance with a bunch of LatAm entrepreneurs, but I’ve only ever stayed in hotels; you could learn a lot from staying in a few hostels in prospective countries of interest and talking to the management).
No one buys property outright.
You pay 20% down and get a mortgage.
So 80k down for a 400k property, then has some spare cash to tide him over for a few years in case he doesn't turn a profit.
Like many businesses, he will probably barely break even, but when he sells the property, the appreciation and mortgage paydown will give him a nice nest egg.
>Is $150,000 USD enough to start a travelers hostel?
$150k is barely enough to buy a small apartment in most places that allow foreign investment in real estate, not a hostel. At best you're looking at a rental, but that can go south quickly and will likely mean hemorrhaging money until business picks up (or you lose solvency) - risky idea, especially considering you're looking for financial advice on a chinese cartoon imageboard.
Not to hijack your thread but I've always dreamed of opening up a hostel with a language school attached to it in Latin America. But its a bit of a pipe dream
> I've always dreamed of opening up a hostel with a language school attached to it in Latin America. But its a bit of a pipe dream
It doesn’t have to be a pipe dream if you can raise, save, or borrow perhaps half a million dollars.
Not the guy you were talking to, but it seems a terrible idea to borrow in order to go through with something like this. It's one thing to finance a passion project with your own money. But when it's someone else's money, that comes with strings attached. You'll have to worry about profitability. What if General Alberto Barbosa seizes power and the currency loses half its value relative to the dollar?
Fair enough. But when I said borrow, I was thinking of getting a property with a mortgage, not asking some loan shark for a wad of cash. In many environments there may be little difference, of course.
You can forget about borrowing locally. I'm only familiar with the situation in Colombia, but I'd be surprised if you were able to borrow money on terms as good as you could find in America.
Interest rates in Colombia are usurious because the risk of lending is a lot higher: the country is a lawless place, the economy sucks, and banks are skittish about who they release money to.
America has the finest capital markets in the world. No other place comes close. That's why people all over the world buy stocks and invest in our country. For all its social problems, the country has a (relatively) orderly and efficient financial system.
Interest rates are also high in Colombia because the COP continues to devalue against the USD and most other Latin American currencies at an absurdly rapid pace.
Run a "locals night" at hostel and bring prostitutes. Profit.
There's this strange New Zealander who did this in Colombia. Called it the Black Sheep Hostel. One of the best party hostel in Medellin. He stays aloof from guests, probably got chlamydia from one too many hippie broads. But he could totally slay if he wanted to, with a setup like that.
There was a dude who worked remote before covid that spoke to no one but every day had two prostitutes come through. They showered in dorm bathroom lol
kek, I stayed there in 2015 or 2016. Went out to El Poblado with a bunch of Australians. Dude named Todd spent the entire day drinking in the common garden.
We went out fairly late, and I decided to call it an early evening. Todd also announced he needed to get some rest and said he’d leave a few minutes after me. Anyway, I can’t remember the exact sequence of events, but I woke up in the morning and:
>Australian group is still drinking in the common area
>they see me
>”ay mate, did ya hear what happened to Todd?”
>”Todd got fricking ROBBED, mate”
>”yeah, he pushed off a few minutes after you, didn’t think we’d see him again”
>”but an hour or so later, we’s walking back to the hostel, and here comes Todd, running down the footpath in his underwear—poor bloke said he’d gotten into a taxi, but it wasn’t really a taxi, and then they took everything down to his tighty-whiteys)
>”we was gonna help him, but then he just takes off again—and the next we see, he’s getting into another unmarked car, and off he goes!”
>”ain’t nobody seen or heard from Todd since”
>”he could be chained up in a basement right now gettin’ raped, innit”
>tfw nobody saw or heard from Todd after that
Rip lad
I remember spending all night drinking wine and sitting around a table talking to a bunch of randos I never saw again. We stayed up talking until 7am (a few nose beers helped).
The gender ratio was very good considering Medellin is infamous as a sexpat destination. Colombia tends to attract a younger, more adventurous sort of roastie backpacker. All the cows that travel for Instagram likes go somewhere else.
>>”he could be chained up in a basement right now gettin’ raped, innit”
fricking kek
In addition to what others have said, the hostel is going to demand your attention 24/7 365 days a year. Don't think that it'll be a base for you to travel and have fun.
hostel owners always have other people to take care of the place and give them time off. family works best.
The economics of a hostel business is basically the same as a rental house or an AirBNB.
So do some research on how to crunch numbers for it.
As a quick example, with some made-up numbers:
You find a 400k property in a dream location, and put 20% down (80k), and have a 2000$/mo mortgage, plus expenses for food/utilities/taxes of maybe another 1000$/mo.
So your total expenses are 3000$/mo.
You have 10 units to rent out, and can rent them out for 30$/night = 300$/day = 9000$/mo.
However hostels ussually have high vacancy rates, so more likely you will be hardly breaking even, and have hardly any cash left over at the end of the month.
But maybe you can do a really good job with marketing, or being a hype man that gets good reviews, and maximize your tenancies.
Let's assume that you only earn enough money to pay your basic living expenses.
Then every year you will save money from apprecation = 400k * 7% appreciation = 28k, and mortgage paydown (aprox 10k),
so at the end of each year you will have about 40k of equity in your property saved up.
So basically you will hardly save any money, but when you sell the property, you will have a nice nest egg to retire or plan your next thing.
So you gotta be a bit of a business man to know how to crunch real estate numbers, then a bit of a marketer to get people in the door, then have good hosting/bartender skills to make people have fun at your place.
>Then every year you will save money from apprecation
This is wishful thinking. Real estate prices are hugely inflated, even in Colombia. Lots of gringos are doing exactly this, and snapping up entire neighborhoods. But what if prices crash? It probably wouldn't happen in America, but it might in Colombia.
You don't think countries with 20% inflation will have 20% appreciation in their real estate market?
It's the same shit in every real estate market in the world. There is always risk of the market crashing wherever you buy.
Some countries and cities have high risk real estate markets, but there is opportunity out there as well.
You're right that a crash is unlikely, and that there's risk in any investment. But it's worth keeping in mind that a Latin American hostel scheme using borrowed US dollars is risky.
You're not going to be able to do this with a local loan, for reasons I've mentioned above. You're gonna have to borrow in America, which means repaying debts in US dollars... while you're charging guests in Colombian pesos or whatever the local currency is. You're gonna be vulnerable to fluctuations in the exchange rate, which can vary a lot and change suddenly.
There's a reason mainstream investors don't bring their money to these countries. Yes, high risk environments can bring about a high reward... but often they leave you without a pot to piss in.
I think it's very doable for someone who wants it enough. I've seen tons of white boomers who own restaurants or hostels when backpacking Asia.
Colombia is risky, but there are countries with safer economies. Personally I would stay the frick out of South America if I were going to do it myself. Mexico for example would be a lot safer.
At the end of the day though, a hostel is basically just a rental business, not too different from running an AirBNB.
It's not some impossible venture.
It's like you can buy a 500k apartment in some American city, or buy a 500k hostel in your dream country and try to live out your dream.
Yeah maybe things won't work out, but you could say the same about anything if you're so risk averse.
>Yeah maybe things won't work out, but you could say the same about anything if you're so risk averse.
I'm not saying it's impossible, I'm saying you need to think about it carefully. On first glance, it seems like a great way to escape ordinary life. You're gonna be partying 24/7, meeting interesting people in a foreign country, escape the rat race.
In reality, you're gonna be fighting every day to make your hostel or bar or whatever the frick into a profitable business. You can't put in the hours and clock out when it's YOUR money on the line, especially borrowed money. Like someone else said, it's a 24/7 commitment.
A loan would tie you to that place like a mortgage would have tied you down in America. Is that really how you want to spend the next X amount of years in your life? You may come to regret having gone along with it.
I'm not saying don't do it. Just make sure you're making the right call.
I'm not OP.
I had a bartender roomate who I think would be the perfect personality to do something like that. It's not for everyone though.
>You can't put in the hours and clock out when it's YOUR money on the line
Dude it's like running an AirBNB.
It's not an impossible thing for people with a bit of hustle and outgoing personality.
>A loan would tie you to that place like a mortgage would have tied you down in America.
If it doesn't work out in 2-3 years, you just sell the property.
>Dude it's like running an AirBNB.
It is NOT like running an Airbnb. A little bit of Black Sheep lore for you guys... did you know the hostel was robbed at gunpoint a few years back? Guys with guns went through the place and helped themselves to whatever they found.
That's why if you visit Black Sheep today, there's an electric fence that ALL people entering the grounds have to be buzzed in through, not to mention cameras everyone and the 6'5 Colombian guy working the front desk.
Obviously, there's not going to be as much danger if you go with a country like Thailand vs. Colombia. But it's dishonest to say it's "like running an Airbnb." Running an Airbnb in America is complicated enough as it is.
>Obviously, there's not going to be as much danger if you go with a country like Thailand vs. Colombia.
I know a few expats who opened businesses in Thailand. The more honest you are, and the more profitable your business, the less time you will last. You run the risk of being milked by police or burned (literally) by rival businesses, especially if the rivals are locally owned. The best business in Thailand is a low-key hobby that pays the bills, has a clientele that wouldn't go to rivals if you disappeared (like a bar mostly your friends patronize) and doesn't rise up much above anyone else doing the same thing. That, or marry the daughter/sister of a RTP cop and be cool with paying relatively fair protection money rates that won't get jacked up all of a sudden (as long as you keep the wife and your in-laws happy).
It's actually easier to do this in Cambodia and Vietnam. You still need a local face (probably your wife or someone in her family), but you won't literally get burned out and you can even be profitable and expand without paying much in bribes.
>If it doesn't work out in 2-3 years, you just sell the property.
Sure, once you realize the mistake you've made, good luck convincing a greater fool to take the property off your hands. It's not even guaranteed you'll sell at a profit if anything happens to real estate prices. You could walk away owing money.
>good luck convincing a greater fool to take the property off your hand
You know anon you don't have to buy in the sketchiest neighborhood of the sketchiest city of the sketchiest country.
>You could walk away owing money.
That's the same risk everyone takes when they buys a property in their own country as well.
>You know anon you don't have to buy in the sketchiest neighborhood of the sketchiest city of the sketchiest country.
Uhh you know Black Sheep is located in what's supposedly the most exclusive neighborhood in Medellin, right?
At least if you buy there, you'll have property in a city that attracts interest from investors. You could probably find some other moron willing to buy a hostel from you within months, if you chose to sell. Good luck trying that with some beach place in the middle of nowhere.
Still, I imagine it'd be hard to convince someone to take a $500k lemon off your hands.
>There's a reason mainstream investors don't bring their money to these countries.
The reason is that if your an American looking to invest in real estate, there's tons of options probably within a 2 hour drive of where you live.
But if someone wants to escape the corporate grind of America and live in a party atmosphere, well that's where the dream of renting out a hostel comes to play.
Really any sort of business would work though - owning a bar, club, restaurant, AirBNB, hostel.
I'm gonna finish this off by saying the New Zealand guy with the hostel in Colombia did NOT look happy. He seemed like some sort of misanthrope. Just putting that out there.
Imagine all the bribes
I'm starting one near a US national park. I don't want to go into details because mongolian basket weaving forum, but the idea is
>lands cheap, like almost they are giving it away
>open seasonally (Apr-Nov)
>lots of seasonal workers looking for cheap rent
>van lifers
and hopefully a rebound in internationals coming to the USA who are looking for this kind of accomodation. I figure when/if these people come back to the US they will start with the parks and not the cities, for a variety of reasons that are very obvious.
i am very worried about how im going to keep drug addicts and vagrants out. my wife and I cannot personally police this all the time.
anyways, right now we are thinking this will cost about a million and a half to get running, not including our home on property (but including utilities). a shocking amount is proving to be legal, as getting a liquor license is turning out to be a huge slog. we are on the verge of partnering with a brewery start-up, as that's an easy way to backdoor it (but requires us to close by an earlier time). selling food on site is hard too, but luckily food truck exist and we're confident we can have a good rotational of them come through.
50 van spots (no RV's) and 15 bunk rooms, the exact composition we're working on but right now 6 bed dorms with three quarters mixed and one quarter womens only seems like the sweet spot.
we should be able to break even on rooms, score a small yet worthwhile profit on the van spots but most our money is probably going to come from alcohol sales and booking tours (wildly lucrative). live in the city during the off-season, live at the hostel during the season. we both backpacked a ton until our mid-thirties and this has always been a dream. if its open within 5-10 years I'll be pleasantly surprised though. there is a lot to do, and we both have careers that take us away from it.
>i am very worried about how im going to keep drug addicts and vagrants out. my wife and I cannot personally police this all the time.
Something I found in New York City hostels that I found to be sensible is they don't accept people who live within 30 miles of New York City, or allow stays longer than 21 days.
This probably goes a long way towards keeping the worst people out. Like frickups who are only there because no one will rent to them, and it's the only alternative to homelessness, or scammers who are there to prey on tourists (not likely to exist in a high income country like America, but still).
yeah these were the first two suggestions, sadly they won't work for us since the county were located in has a population of barely ten thousand as a whole. that and a big part of our business is going to be seasonal workers living there for the summer mo's, that means long stays.
the honest answer might turn out to be vans only with only two dorm rooms until we can figure it out and experience it first hand. that sucks because the dorms are pretty central to the vision I have for the place, but you gotta do what you gotta do.
Something you might want to do is make prices moderately above those of hostels in the area. Frickups tend to be broke and need to stretch their money out as many days of non-homelessness as possible. By making sure yours are NOT the lowest prices, you can make sure the competition will be absorbing those people, not you. And you can market yourself as something for non-broke travelers. That might require some additional capital expenditure to make the place seem more expensive than the competition. You don’t have to do overboard, of course. Being mid-range rather than dirt cheap is fine. Lots of rich people out there spending money, even if we’re living in hard times.
Sounds like a dumb idea, they always lose money until they give up and quit or the hostel becomes more and more run down and shitty. Then some start overcharging like a hotel so you pay hotel prices for a fricking cheap dorm bed and shared moldy bathroom. A better idea is to have only private rooms, and rent out some short term but also offer long term rates. If you buy a fixer house and restore it you'll spend about 50k and can make that back, while still having 100k to spare, and you can live in the place while renting out rooms. You can also gain residency abroad by owning property, and if you stay long term or start a family you will get paid to move there anyway. You also should pay people to work there or do it all yourself, if you try to get people to work for nothing they will not respect you or your business
>Is $150,000 USD enough to start a travelers hostel?
>in a time where median house/property price is 1.7mil
lol if you're gunna go into debt you'd wanna hope you at least already have experience running a hostel first
quit your job and get a job managing a hostel, do that for 5 years and see what you think