| Thinking of Buying a Condo Hotel Here Are 20 Things | | | | available. |
| You Need to Know | | | | 12. How long have condo hotels been around and |
| 1. What is a condo hotel or condotel? | | | | where are they located? |
| Think of a condo hotel (also sometimes called a | | | | Condo hotels have been around for several decades, |
| condotel or hotel condo) as buying a | | | | but the huge surge of four-star and five-star condo |
| condominium,Visit Here one that is part of a four-star | | | | hotels that have been making their way across the |
| caliber hotel. Therefore, as an owner, when you are | | | | country, started around year 2000 in the Miami area. |
| on vacation, you'll get the benefit of more four-star | | | | The Miami-Fort Lauderdale area still has the most |
| services and amenities than you'd get in a typical | | | | condo hotels, but areas like Orlando and Las Vegas |
| condominium. | | | | are developing condo hotel properties at an even |
| 2. What types of services and amenities are found in | | | | faster rate and will likely surpass South Florida soon. |
| condo hotels? | | | | Other up-and-coming areas are places like the |
| If you can imagine the niceties you'd find in an | | | | Bahamas, Panama, Dominican Republic, Mexico, |
| upscale hotel, then you can picture a condo hotel. | | | | Canada and Dubai. |
| Among the features are often resort-style pools, | | | | 13. How much do condo hotel units cost? |
| full-service spas, state-of-the-art fitness centers, fine | | | | That's like asking how much a car costs. There are |
| dining restaurants, concierge services and room | | | | different quality condo hotels. Some require greater |
| service. | | | | amounts of money than others, obviously. |
| In some locations, like Las Vegas, you'll find condo | | | | There are inexpensive condo hotels out there for as |
| hotels with their own casinos, retail areas, and | | | | little as $100,000. These are typically found in |
| entertainment venues. In places like Orlando, you'll | | | | properties that have converted their use from an |
| find condo hotels with their own water parks and | | | | existing hotel. They are hotel room-sized, lack kitchen |
| convention facilities. | | | | facilities, luxury franchises, and other first-class |
| 3. What is the difference between a condo hotel and | | | | amenities. |
| a traditional condominium? | | | | Then there are the four-star or greater properties |
| The big difference between a hotel and a condo | | | | that may start in the $300,000 to $400,000 range, |
| hotel is that a hotel typically has one owner, either | | | | but can go all the way up to $800,000 just for a |
| individual or corporate, but a condo hotel is sold off | | | | studio unit. One- and two-bedroom units cost |
| unit by unit. Therefore, a 300-room condo hotel could | | | | substantially more than a studio. Of course, the |
| have as many as 300 unit owners. | | | | studios do come fully furnished and finished, and will |
| 4. Is it evident to hotel guests whether they're | | | | be significantly larger in size than a typical hotel room, |
| staying in a condo hotel or a traditional hotel? | | | | and may attract guests because of its name like St. |
| A hotel guest will likely never know that the hotel | | | | Regis, Ritz or W. |
| has multiple owners because the property is | | | | 14. What are typical maintenance costs? |
| operated just like a traditional hotel and often under | | | | On average about $1.00 to $1.50 per sq. ft., but the |
| the management of a well-known hotel company like | | | | range can exceed $2.00 sq. ft. in the most luxurious |
| Hilton, Hyatt, Starwood, Trump or W. Also, each of | | | | properties. |
| the individual condo hotel units will look identical in | | | | 15. Do you buy condo hotel units after they have |
| design and décor to every other, just as they | | | | been built, or can you purchase condo hotels in |
| would in a traditional hotel. | | | | pre-construction? |
| 5. Who typically buys condo hotels? | | | | Unless you are in a hurry to get started vacationing |
| They're primarily sold to people who want a vacation | | | | or you need to complete a 1031 exchange, it's best |
| home but do not want to deal with the hassles | | | | to buy condo hotels in pre-construction as early as |
| typically associated with second home ownership | | | | possible. That's when prices are lowest and unit |
| such as maintaining the property or finding renters in | | | | selection is greatest. You will likely wait two years or |
| the off season. | | | | longer before closing on and taking possession of |
| 6. What is the demographic of the typical condo | | | | your condo hotel unit, but you will have locked in the |
| hotel buyer? | | | | price and will get the benefit of maximum |
| The spectrum of condo hotel buyers is pretty broad. | | | | appreciation. |
| There are families that want a second home in a | | | | 16. Is there anything else investors should want to |
| vacation destination. There are baby boomers who | | | | know about condotels? |
| are at or nearing retirement and want somewhere | | | | There is more to buying this type of real estate than |
| they can "winter." There are also plenty of investors | | | | the old phrase, "location, location, location." While |
| who purchase a condo hotel unit with little intention | | | | most condo hotels are located in desirable resort and |
| of ever using it; they're in it for the potential | | | | business area locations, what is most important is a |
| appreciation of the real estate. | | | | good franchise with a strong reservation system. |
| 7. Can you live in a condo hotel? | | | | Also, do not be fooled by an aggressive rental split. |
| Condo hotels are not typically offered as primary | | | | One way or the other, the developer of the |
| residences. In fact, many of them limit the unit | | | | property will have to staff, maintain and operate the |
| owner's usage of the condo hotel unit (typically 30-60 | | | | hotel and its services like the restaurants, bars, spas |
| days per year) because the unit is expected and | | | | and pools from his share of the proceeds. If he's |
| needed in the hotel's nightly rental program where it | | | | giving you a very favorable share of the rental, he's |
| can be offered to guests and generate revenue. | | | | also more likely to be charging you a higher monthly |
| 8. Who gets the money when your condo hotel is | | | | maintenance fee. Of course, this goes both ways. If |
| rented out? | | | | the maintenance split that is offered is closer to |
| The hotel management company splits the rental | | | | 50-50, then your maintenance should be more |
| revenue with the individual condo hotel owner. While | | | | reasonable too. |
| the exact percentages vary from property to | | | | 17. Any suggestions to investors in choosing which |
| property, the typical rental split is in the 50%-50% | | | | condo hotel to buy? |
| range. | | | | Get good advice. That means you the pitch provided |
| 9. Who finds hotel guests and then cleans and | | | | by an onsite salesperson at a condo hotel. You want |
| maintains the condo hotel units? | | | | to talk with a broker who specializes in condo hotels |
| The hotel management company markets the | | | | and who knows and understands the entire condo |
| property and books hotel guests. It also maintains | | | | hotel market, not just the facts pertaining to a single |
| the unit and ensures the smooth operation of all of | | | | property. He or she will listen to your wants and |
| the hotel's services and amenities. | | | | needs and then offer recommendations as to which |
| 10. What are the advantages / disadvantages of | | | | properties best match your requirements. You'll have |
| purchasing a condotel over purchasing typical rental | | | | an opportunity to comparison shop and consider the |
| properties? | | | | pros and cons of each available property. |
| Advantages include: | | | | A good broker can be the difference between your |
| · Hassle-free ownership; no landlord issues | | | | buying a condo hotel that will be problematic and not |
| · Rental revenue to offset some or maybe all | | | | live up to your expectations or one that will provide |
| ownership expenses | | | | you with years of great vacations, good annual |
| · A fantastic vacation home available for use | | | | revenue and a substantial profit when you sell. |
| whenever you want | | | | 18. Does it cost more to use a real estate broker to |
| · A real estate investment at a time when other | | | | purchase a condo hotel than buying a unit on one's |
| investments may seem less attractive | | | | own? |
| · Strong likelihood of appreciation | | | | No. With new condo hotel properties, the prices are |
| · Pride of ownership --"I own a piece of a Trump" | | | | always set by the developer and are exactly the |
| Disadvantages include: | | | | same whether you buy directly from an onsite |
| · Annual cash flow could be equal to or less than | | | | salesperson at the property or using a broker. |
| annual ownership costs | | | | The broker's commission is always paid by the |
| · Pets are usually not welcome. | | | | developer and is already built into the price regardless |
| · An owner's condo hotel unit may be rented when | | | | of whether an outside broker participates in the sale |
| the owner wants to it, so advance reservations are | | | | or not. Since a broker's representation is free to |
| required to guarantee availability. | | | | buyers, it does make sense to enlist their aid and get |
| · The condo hotel unit is subject to the same dips in | | | | the benefit of their advice before making a purchase. |
| the market that affect all hotels in the competitive | | | | 19. How can prospective buyers find a good condo |
| market set: hurricanes, terrorist threats, warm | | | | hotel broker? |
| winters up north, price of gas, etc., all of which can | | | | Ask friends for broker recommendations or search |
| affect a unit's occupancy rate and the amount of | | | | online for "condo hotel broker." Visit condo hotel |
| revenue it generates. | | | | broker websites and see if the information they |
| 11. Are condo hotel units difficult to finance? | | | | provide seems comprehensive and unbiased. If their |
| Not at all, but they do take 20% down typically, | | | | website seems to focus on selling homes or office |
| whereas condos can be purchased with less cash | | | | space, and the condo hotel information appears to be |
| down. It's also important to make sure you use a | | | | an afterthought, steer clear. Your best bet is to |
| mortgage broker who has had success in getting | | | | work with a condo hotel broker who specializes. |
| condo hotel financing deals done. Many banks still do | | | | 20. How can buyers learn about new condo hotel |
| not do them, but more and more are getting | | | | properties coming on the market? |
| involved as condo hotels become more widely | | | | |