1. What is a condo hotel or condotel?
Think of a condo hotel (sometimes also called a condotel or condo hotel) like buying a condo, even if it’s part of a four-star caliber hotel. So, as an owner, when you’re on vacation, you’ll get the benefit of more four-star services and amenities than you would in a typical condo.
2. What types of services and amenities are found in condo hotels?
If you can imagine the niceties you would find in a luxury hotel, then you can imagine an apartment hotel. Features often include resort-style pools, full-service spas, state-of-the-art fitness centers, fine-dining restaurants, concierge services, and room service.
In some places, like Las Vegas, you’ll find condominiums with their own casinos, shopping areas, and entertainment venues. In places like Orlando, you’ll find condominiums with their own water parks and convention facilities.
3. What is the difference between a condo hotel and a traditional condominium?
The big difference between a hotel and a condo hotel is that a hotel usually has an owner, either individual or corporate, but a condo hotel is sold unit by unit. Thus, a 300-room condo hotel could have as many as 300 unit owners.
4. Is it obvious to hotel guests whether they are staying in a condo hotel or a traditional hotel?
A hotel guest may never know that the hotel has multiple owners because the property operates like a traditional hotel and is often managed by a well-known hotel company such as Hilton, Hyatt, Starwood, Trump or W. In addition, each of the individual condo hotel units will look identical in design and décor, just as they would in a traditional hotel.
5. Who usually buys condos?
They are primarily sold to people who want a vacation home but don’t want to deal with the hassles typically associated with second home ownership, such as property maintenance or finding renters in the off-season.
6. What is the demographic of the typical condominium hotel buyer?
The spectrum of hotel condominium buyers is quite broad. There are families who want a second residence in a vacation destination. There are baby boomers who are retired or close to retirement and want a place where they can spend the winter. There are also many investors who purchase a condominium hotel unit with little intention of ever using it; they are in it for the potential appreciation of real estate.
7. Can you live in a condo hotel?
Condominiums are generally not offered as a primary residence. In fact, many of them limit the unit owner’s use of the condominium hotel unit (usually 30-60 days per year) because the unit is expected and needed in the hotel’s nightly rental program where it can be offered to guests and generate income.
8. Who receives the money when your condo hotel is rented?
The hotel management company splits the rental income with the individual owner of the hotel condominium. While the exact percentages vary from property to property, the typical rent split is in the 50-50% range.
9. Who finds the hotel guests and then cleans and maintains the condo hotel units?
The hotel management company markets the property and books hotel guests. It also maintains the unit and ensures the proper functioning of all hotel services and amenities.
10. What are the advantages/disadvantages of buying a condotel over buying typical rental properties?
Benefits included:
· Hassle-free ownership; no owner issues
Rental income to offset some or perhaps all of your property expenses
A fantastic holiday home available to use whenever you want
A real estate investment at a time when other investments may seem less attractive
High probability of appreciation
Pride of ownership: “I own a piece of Trump”
The disadvantages include:
Annual cash flow could be equal to or less than annual costs of ownership
· Pets are generally not welcome.
An owner’s condominium hotel unit can be rented whenever the owner wants, so advance reservations are required to ensure availability.
The condo hotel unit is subject to the same market downturns that affect all hotels in the competitive market: hurricanes, terrorist threats, warm northern winters, gas prices, etc., all of which can affect the rate. of occupancy of a unit and the amount of income it generates.
11. Are condo hotel units difficult to finance?
Not at all, but they usually accept a 20% down payment, while condos can be purchased with less down payment. It’s also important to make sure you’re using a mortgage broker that has been successful in financing condominium hotel deals. Many banks still don’t, but more and more are getting involved as condo hotels become more available.
12. How long have the condominiums been around and where are they located?
Condo hotels have been around for several decades, but the great wave of four and five star condo hotels that have made their way across the country began around the year 2000 in the Miami area. The Miami-Fort Lauderdale area still has the most condo hotels, but areas like Orlando and Las Vegas are developing condo hotel properties at an even faster rate and will likely overtake South Florida soon. Other promising areas are places like the Bahamas, Panama, the Dominican Republic, Mexico, Canada and Dubai.
13. How much do the condo hotel units cost?
That’s like asking how much a car costs. There are condominiums of different qualities. Some require larger amounts of money than others, obviously.
There are cheap condo hotels for as low as $100,000. They are usually found in properties that have converted their use of an existing hotel. They are the size of a hotel room, lacking kitchen facilities, luxury franchises, and other first-class amenities.
Then there are the four-star or higher properties that can start in the $300,000 to $400,000 range, but can go as high as $800,000 just for a studio unit. One- and two-bedroom units cost substantially more than a studio. Of course, the studios come fully furnished and finished, and will be significantly larger than a typical hotel room, and may attract guests due to their name like St. Regis, Ritz, or W.
14. What are the typical maintenance costs?
On average, about $1.00 to $1.50 per square meter. ft., but the range may exceed $2.00 per square foot. foot in the most luxurious properties.
15. Do you buy condo hotel units after they have been built, or can you buy pre-construction condo hotels?
Unless you’re in a hurry to start your vacation or need to complete a 1031 exchange, it’s best to buy preconstruction condos as soon as possible. That’s when prices are lowest and unit selection is greatest. You may have to wait two years or more before closing and taking ownership of your condominium hotel unit, but you will have locked in the price and reap the benefit of maximum appreciation.
16. Is there anything else investors should know about condotels?
There is more to buying this type of real estate than the old phrase, “location, location, location.” While most condo hotels are located in attractive resorts and business areas, the most important thing is a good franchise with a strong reservation system.
Also, don’t be fooled by an aggressive rental division. One way or another, the developer of the property will need to staff, maintain, and operate the hotel and its services, such as restaurants, bars, spas, and pools, from their share of the revenue. If you’re giving him a very favorable share of the rent, you’re also more likely to be charging him a higher monthly maintenance fee. Of course, this goes both ways. If the maintenance split on offer is closer to 50-50, then your maintenance should also be more reasonable.
17. Any suggestions for investors when choosing which condo hotel to buy?
Get good advice. That means you don’t want to rely solely on the presentation provided by an on-site salesperson at a condo hotel. You want to talk to a broker who specializes in condo hotels and who knows and understands the entire condo hotel market, not just the facts surrounding a single property. He or she will listen to your wants and needs and then offer recommendations on which properties best suit your requirements. You will have the opportunity to compare stores and consider the pros and cons of each available property.
A good broker can be the difference between buying a condo hotel that will be troublesome and not up to your expectations or one that will give you years of great vacations, good annual income and a substantial profit when you sell.
18. Does it cost more to use a real estate broker to purchase a condo hotel than to purchase a unit on your own?
No. With new condominium hotel properties, prices are always set by the developer and are exactly the same whether you buy directly from an on-site seller or through a broker.
The broker commission is always paid by the developer and is already included in the price, regardless of whether a third-party broker is involved in the sale or not. Since broker representation is free to buyers, it makes sense to enlist their help and benefit from their advice before making a purchase.
19. How can prospective buyers find a good condominium hotel broker?
Ask your friends for broker recommendations or search online for “hotel condo broker.” Check out condo hotel broker websites and see if the information they provide seems complete and unbiased. If your website seems to focus on selling homes or office space, and the condo hotel information seems like an afterthought, stay away. Your best option is to work with a condominium hotel broker who specializes.
20. How can buyers find out about new hotel condominium properties coming on the market?
Condo hotel brokers can be good sources of information, as they often learn about properties before they are released to the general public. Another option is to subscribe to a condo hotel newsletter like the one we publish called Condo Hotel Property Alert. We offer it for free on our website http://www.CondoHotelCenter.com and it features a different condo hotel property coming to market in each edition.