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Condo Hotels Offer Hassle-free -
Vacation Home Ownership
Condo
Hotel Description
Condo hotels are a new trend in second home ownership.
Buyers can purchase a luxury vacation home at a world-class resort and receive
rent revenue whenever they are not using their residence, helping to offset the
costs of ownership.
Condo Hotel Locations
The condo hotel concept began in places like
Miami Beach
and
Fort
Lauderdale
, and these areas have dominated in terms of
the quantity and quality of condo hotels. But now the concept is becoming
popular in other parts of
Florida
including
Orlando
,
Naples
,
Fort Myers
and
the Tampa-Clearwater area.
Condo hotels are also cropping up in many other cities
outside
Florida
, such as
Las
Vegas
,
Chicago
and
New York
.
Condo hotels are even becoming prevalent outside the
U.S.
, particularly in
Panama
,
Costa Rica
,
Mexico
, the Caribbean,
Canada
and
Dubai
,
UAE.
Condo Hotel Properties and Brands
Condo hotel properties are usually large, high-rise,
luxury four-or five-star hotels. They are operated by the biggest names in the
hospitality industry like Four Seasons, Wyndham, Ritz-Carlton, Trump
International, Sonesta, Hyatt, Starwood, Hilton,
Clarion, Regent International, Rosewood, Conrad Hotels and Le Meridien.
Condo Hotel Management Companies
Condo hotel owners have the option of putting their
condo hotel unit into the hotel's rental program. This is what makes condo
hotels so attractive. A professional management company handles renting out the
units when they are not in use by the owner. The management company also
maintains the condo hotel units and the property's common areas, operates the
amenities and provides all guest services.
By capitalizing on the hotel's name recognition,
advertising, national affiliations, centralized reservation system and
management expertise, condo hotel unit owners typically receive a higher level
of rental income than they would from ownership of a traditional vacation home.
Condo Hotels Versus Traditional Vacation Condos and
Single-Family Homes
Condo hotels are not the typical second home. They are fabulously-furnished
condominium suites in some of the most famous hotels and resorts in the
country. Owners have access to all of the luxury amenities and services of the
property, ranging from full-service spas and state-of-the-art fitness centers, to fine dining restaurants and concierge services.
Like a traditional vacation home, owners can use their
home when they want. However, unlike a traditional home, they have the option
of participating in the property's rental program and sharing in the revenue
the home generates. Ownership is 100% hassle-free as all maintenance and rental
issues are handled by in-house management company.
Condo Hotels Versus
Timeshares
With a timeshare, owners are typically allowed just
one or two weeks of the year to use their condo. They receive the same calendar
weeks unless they go through a process to trade time with someone else.
With a condo hotel unit, owners have deeded ownership
to their condo and can usually use it when they want (within the guidelines of
the rental program agreement).
Furthermore, when they're not using it and the hotel
is able to rent the room, the owner receives a portion -- usually in the 50%
range - of the rent revenue.
Finally, timeshares can be difficult to resell, even
if the seller is willing to take a loss. Condo hotels, on the other hand,
because of their prime locations, limited inventory and upscale quality, are a
highly-desired commodity. They are more likely to appreciate over time and can
be readily resold.
Condo
Hotel Prices
Prices for condo hotel units vary based on location,
size, features and amenities. They typically range from $300,000 to over $1
million for prime properties. Popular cities like
Miami
Beach
and
Las Vegas
have some of the
highest prices while bargains can still be had in less well-known locales and
also in countries outside of the
U.S.
like
Mexico
,
Panama
,
Costa Rica
,
the Caribbean and
Dubai
.
Condo
Hotel Expenses
As
part of the rental agreement, the hotel pays for most operating expenses such
as electricity, water, administrative and marketing costs. The condo hotel
owner typically pays the real estate taxes, insurance and capital improvements.
Condo
Hotel Buyers
Typically, condo hotel buyers are vacationers who
appreciate the many wonderful amenities available at luxury resorts. They may
also recognize the appreciation potential of a revenue-generating vacation
home.
The appeal is not limited to
U.S.
buyers.
The concept has received international attention. In
particular, buyers from Latin America and
Europe
are competing with Americans for the best properties.
The Appeal of Condo Hotels
Condo hotels are attractive because they offer a
luxurious lifestyle and hassle-free ownership. In addition, low interest rates
and a volatile stock market have caused investors to diversify and consider
real estate alternatives like condo hotels.
Condo
Hotel Financing
Now that the concept has become accepted
and well-known,
U.S.
lenders have been readily making loans on condo hotels, both to domestic as
well as international buyers. Rates are slightly higher than for primary
residences. Typically 25% to 30% down is required.
Are
Condo Hotels Investments?
The Securities and Exchange Commission (SEC) does not
permit developers or realtors to sell condo hotels as investments. They are
sold simply as vacation homes and a "lifestyle," and no income
projections can be provided. Nonetheless, many buyers are interested in the
investment potential of condo hotels. Some of the factors they take into
consideration are:
- Rent
Revenue: Condo hotel units will
produce rent revenue. That revenue can partially or completely offset the
costs of owning and maintaining the vacation home.
- Appreciation
potential: Most condo hotels are located
in areas that have seen the highest appreciation rates such as South
Florida,
Orlando
and
Las Vegas
.
- Diminished
supply of available land: Desirable locations to build are few. A dwindling supply of available land
in key markets, particularly sites on the ocean in
Florida
and on the Strip in
Las Vegas
,
help ensure that condo hotels, like other types of real estate built in
these locales, see significant capital appreciation.
- Real
estate as a stock market alternative: Many people seek to diversify their financial holdings, combining
stock market investments with real estate holdings.
Condo
Hotels Appeal to International Investors
Condo hotels are particularly attractive to
international investors who wish to have a vacation home in the
United States
and
yet don't want the hassles of caring for that home or renting it out when
they're not using it.
Additionally, the weakness of the dollar has enabled
many international investors such as those from
Europe
to obtain upscale condo hotel units for what amounts to bargain prices.
Lastly, international buyers seek to invest their money in a stable environment
and a flourishing economy.
U.S.
real estate, including condo hotels, often meets this need.
Best
Time to Purchase a Condo Hotel Unit
Buyers who purchase a condo hotel unit in early
pre-construction phases, when prices are lowest, have the best chance of seeing
their investment appreciate. There is a limited inventory of condo hotels, and
many properties actually sell out in the pre-construction phase.
As word continues to spread about condo hotels, more
and more investors from around the country and around the world are learning of
this new real estate trend and looking to participate. In addition, millions of
baby boomers are approaching retirement and seeking second homes for their
personal enjoyment. Demand is increasing. But so is inventory as developers
recognize the benefits of creating a mixed-use property and seek to meet that
growing demand.
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