Hotel development is a billion dollar business and usually involves teams of investors and years of planning before any construction or renovation work begins. For exclusive hotels and resorts, the numbers involved are usually much greater than for less-exclusive ones. Your major concerns in such a deal (assuming you will be a minor partner either way) should be occupancy and management.

Hotel development is a commercial real estate enterprise and if the rooms are empty there is no commerce. Conversely if the rooms are full and the hotel's management team is lousy, your hotel could stumble along barely squeezing out a profit. Either situation is horrible for the investor. After all, hotel development is about making a profit rather than about building pretty things for people to look at but not spend their money in.

Many traditional IRA custodians disallow participation in such commercial real estate deals. To use funds from your IRA, you will usually need to have a self-directed IRA over which you have checkbook control. (This is absolutely true for properties located on foreign soil.) Opening a self-directed IRA is quite simple. You just need to shop around for companies offering them and check out their fee structures. (You can start your search with Asset Exchange Strategies LLC out of Austin, Texas.)

Do not Invest in the Dark
Though it has been warned against thousands of times, some investors still get too anxious to make a profit and skip the step where they make an exhaustive study of a deal before they fork over their money. You should know something about everyone involved in the deal, the specifics of who will be doing the construction or renovation, the reputation of the management team, the room rates, the occupancy expectations, the local economy, and any other bit of information that may affect your investment. You can only protect your money while it is still in your pocket.