1. Explain the Condo-Hotel Concept
Condo-hotel units are sold to individual buyers who may use their unit
whenever they like and place it into an organized rental program when they are not using it. Rental revenue is shared
with the management company and helps defray the owner's expenses. Condo hotels are some of the most desireable real estate
for a developer to build because he can pre-sell his units and literally be debt-free once the property is sold out, usually
before the building's construction is even complete! Some big name developers have jumped in with both feet. Donald Trump,
for instance, already knew success with his New York Trump International Condo hotel and now has developed the Trump International
in Sunny Isles Beach, Florida, another in Chicago, and he's planning additional condo hotel developments in Ft. Lauderdale
and Toronto.
2. What are the main advantages of Condo Hotel ownership?
Most condo hotels are exceptional properties with amenities like health and fitness
centers, business centers etc. They may also provide an expanded array of hotel services such as valet, concierge and maid
services. Most are built on prime, highly desireable property which gives you high occupancy when rented.
You receive the appreciation on your unit and also rental income from the rental of
the unit.
The owner never has to worry about any maintenance, upkeep or management issues, they
are all handled by a professional management company on premise.
3. What is the main role of the condo-hotel operator?
The operator of the rental program, in exchange for a share of the revenue, markets
the units as a hotel, takes reservations, operates the front desk, and provides the services hotel guests expect, such as
housekeeping, food and beverage, and concierge.
4. How much of an investment will I need?
It depends on the location of the condo hotel, the size of the individual unit you
select (studio, one, two or three bedroom) and the timing. Prices will range on the average from $185,000 to $400,000.
First, it's important to note that many condo hotels are sold out in pre-construction.
In those situations, most condo hotel developers require a 20% deposit, usually 10% at reservation and another 10% at contract,
however, some developers require as much a 30% down, with the last 10% coming due at construction or at roof top.
5. How About Financing?
You can expect to pay at least 20% downpayment and a little higher interest
rate, we have financing available or you can use your own lender.
6. How well do these units resell? Will I Likely see an increase
in price if I sell in five years?
Appreciation really is the best selling point for condo hotels. Florida real estate
has a long history of double digit appreciation. There's no reason to believe this trend won't continue.
There are way fewer condo hotel units than traditional condos. It's interesting to
note that most condo hotels sell out before construction is complete and there are very few re-sells available. As you know
when demand exceeds supply, prices keep rising.
Furthermore, most condo hotels are built on prime property and offer amenities that
traditional condos do not. Finally, as long as more people are looking to diversify their investment portfolios with
real estate, condo hotels have a great deal of appeal.
7. How risky is this type of investment?
Far less than other types of investments. I don't believe that it is any more or less
risky than any other type of real estate investment. Assuming your unit is in a building with no living or rental restrictions,
then it is no more risky than buying a unit in a straight condominium. In fact, it may be a safer bet because when you are
ready to sell, you not only have the building's amenities to offer a potential buyer, but also the services of a five star
hotel and rental income from the rental of the unit.
8. Bottom line, is a condo hotel unit a good investment?
The answer depends on your main objective. In our opinion, condo hotel units represent
a unique investment opportunity. If you plan to use your unit as a vacation home, a condo hotel can be a wonderful investment.
You get a first-class vacation property in a highly desirable location. And when you're not using it, someone else takes care
of renting, managing and maintaining it for you producing income. Talk about hassle-free!
Finally, the idel condo hotel unit buyer should be able to be satisfied with covering
an adequate amount of expense from rent, but is more inrerested in the potential for long-term appreciation. In that
case, the condo-hotel concept is a real winner!
