1. What is a condohotel or condotel?
A condo hotel, also known as a condotel or condotel, is similar to buying a condominium. However, it is part of a four star hotel. As an owner, you will enjoy more amenities and services than you would in a condominium.
2. What amenities and services are available in condo hotels?
A condo hotel is a hotel that offers all the amenities you would expect to find in an elegant hotel. You will find resort-style pools and full-service spas as well as state-of the-art fitness centers, fine dining restaurants and concierge services.
Some condo hotels have their own casinos, retail spaces, and entertainment venues. Condo hotels in Orlando will have their own convention and water parks.
3. What’s the difference between a condominium hotel and a traditional condominium?
A condo hotel can be sold unit-by-unit, whereas a hotel usually has one owner. A condo hotel with 300 rooms could have up to 300 owners.
4. Are hotel guests able to tell if they are staying in a condo or traditional hotel?
The hotel guests will not know that there are multiple owners. Each condo unit will be identical in design and decor, just like they would in a traditional Hotel.
5. Who buys condo hotels most often?
These homes are primarily for people who desire a vacation home, but don’t want to deal the usual hassles associated with second home ownership like maintaining the property or finding tenants in the off-season.
6. How does the average buyer of a condo hotel look?
There are many buyers of condo hotels. Many families want to buy a second home in a vacation spot. Baby boomers are nearing or at retirement age and are looking for a place they can “winter” in. Many investors purchase condo hotel units with no intention of ever using them. They do so for the potential appreciation of real estate.
7. You can live in a condo-hotel.
Condo hotels aren’t often used as primary residences. Many condo hotels restrict the owner of the condo hotel unit’s use (typically 30-60 day per year), as the unit is needed for the nightly rental program, where guests can rent it out.
8. Who gets the rent money for your condo hotel?
The rental revenue is split between the hotel management company and the condo hotel owner. The typical rental split ranges from 50% to 50%, although exact percentages may vary depending on the property.
9. Who is responsible for finding hotel guests and cleaning and maintaining condo hotel units?
The company manages the hotel and markets it. It maintains the property and oversees all aspects of the hotel’s amenities and services.
10. What are the benefits and disadvantages of buying a condotel instead of renting a typical rental property?
These are some of the advantages:
* No hassle ownership; no landlord issues
* Rent revenue to offset any or all of the ownership expenses
* Fantastic vacation home that you can use whenever you like
* Real estate investments at a time when other investments might seem less appealing
* High likelihood of appreciation
* Pride of ownership — “I own a piece Trump”
Some disadvantages include:
* Annual cash flow may be equal or lower than annual ownership costs
* Pets are not usually welcome.
* Owners may rent their condo hotel units when they wish, so reservations in advance are necessary to ensure availability.
* Condo hotel units are subject to the same market dips that affect all hotels in the competive market set: hurricanes and terrorist threats, warm winters up North, price of gasoline, etc. All of these factors can impact a unit’s occupancy rate as well as the revenue it generates.
11. Is it difficult to finance condo-hotel units?
They don’t require 20% down, but condos can be bought with less cash down. A mortgage broker with experience in condo hotel financing deals is a must. While many banks are still not willing to do this, more condo hotels are becoming available and more banks are starting to do so.
12. What is the history of condo hotels?
Although condo hotels have been around since the 1960s, the explosion of five-star and four-star condo hotels has been a major trend in the United States. It all started in 2000, when the first one was built in Miami. While Miami-Fort Lauderdale still holds the largest number of condo hotels, areas like Orlando or Las Vegas are building condo hotel properties at a faster pace and will soon surpass South Florida. There are also areas like Canada, Mexico, Canada, Panama, Dominican Republic and Dubai that are on the rise.
13. What is the cost of a condo unit in a hotel?
It’s similar to asking the price of a car. There are many quality condo hotels. Certain condo hotels require more money than others.
Condo hotels can be found for as low as $100,000. These condo hotels are often found in properties that were converted from an existing hotel. These are typically hotel rooms of the same size as a regular hotel, but lack luxury franchises or other first-class amenities.
There are also four-star properties, which can start at $300,000 to $400,000, but can cost up to $800,000. A studio unit is priced at $800,000. Studio units are significantly more expensive than studios. Studio rooms come furnished and fully finished. They are larger than typical hotel rooms and can attract guests due to their names like St. Regis, Ritz, or W.
14. What are the typical maintenance costs?
Averagely, $1.00 to $1.50/sq. However, the range can go beyond 2.00 sq. In the most luxurious properties, it can be as high as 900 ft.
15. Can you buy condo hotels units once they are built?
Pre-construction condo hotels are best if you don’t want to rush to start vacationing or need to do a 1031 exchange. This is when unit selection and prices are at their lowest. Although you may need to wait for two years before closing and taking possession of your condominium hotel unit, you will be able to lock in the price and enjoy maximum appreciation.
16. Are there any other things condot investors need to know?
This type of property is not just about the “location, location and location” mantra. There are many other factors involved in buying it. Condo hotels tend to be located in prime locations for business and resort areas. However, it is important to have a solid reservation system and a reliable franchise.
Don’t be deceived by a high rental split. The developer of the property must staff, maintain, and operate the hotel, as well as its services such as the bars, restaurants, spas, and pools, from his share. You will likely be charged a higher monthly fee if he gives you a large share of the rental. This applies both ways. Your maintenance should be less expensive if the maintenance split offered is closer than 50-50. Also do not forget people will complain about the hotel. Having great support will help.
17. Are there any suggestions for investors on choosing a condo hotel to purchase?
Good advice is essential. This means that you shouldn’t rely on the pitches provided by onsite salespeople at condo hotels. A broker who is a specialist in condo hotels, and who understands the whole market for condo hotels, and not just a particular property, is the best choice. The broker will listen to what you want and need and make recommendations about which properties would be best suited to your needs. You will have the opportunity to compare properties and weigh all of their pros and cons.
Good brokers can make the difference between buying a hotel in condo that is not up to standard and one that you will enjoy many years of wonderful vacations and good income.
18. Is it more expensive to hire a broker to buy a condo hotel than to purchase one on your own?
The developer always pays the broker’s commission and it is included in the price, regardless of whether an outside agent participates in the sale. Buyers do not have to pay a broker to represent them. It is a good idea to seek their assistance before you make a purchase.
19. How do prospective buyers find a reliable broker to help them buy condo hotels?
Ask your friends to recommend brokers or search online for “condo broker”. Look at condo hotel broker websites to see if their information is comprehensive and impartial. Avoid websites that seem to be solely focused on office space or homes for sale. Condo hotel information is often an afterthought. It is best to hire a condo hotel broker that specializes.