Developers are investing in condo hotels, a hybrid that combines condo living with hotel service. They are appealing, yet unproven. Should you consider buying one?
For a developer, a condo hotel is a good idea. It is getting more and more difficult to finance the construction of a hotel. With a condo hotel, the developer get investment money early on from buyers' deposits. But what do the buyers get?
Buying into a condo hotel gives you the option of owning a unit in a vacation destination. Buyers also earn additional income when the unit is rented out to other travelers in their absence. It is a vacation home and a rental property. These buildings can be brand-new, often built under the sponsorship of a luxury hotel brand. Or they can be the result of converting a four or five star hotel.
The features listed below describe a typical unit.
How it is like a condominium:
It will be set up like a residence with things like appliances, full kitchen and , internet access.
There are monthly condo fees.
You can obtain financing to make the purchase.
You can decide to sell the unit at any time.
The owner pockets the profit if the unit appreciates.
How it is like a hotel:
You must book ahead of time to use your room.
It comes fully furnished, so you do not have to decorate.
There is a staff and concierge available to attend to requests.
There will be other amenities that you would find at a hotel such as a spa, restaurant, and pool.
Staff takes care of maintenance and repairs.
The condo hotel concept is still relatively new, but that doesn't mean that local governments have not taken notice. Some cities regulate how long an owner can reside in their unit, with 60-90 days being the typical limit. Owners do not pay hotel taxes to stay in their own unit, but that does not mean that additional taxes will not be levied in the future. While the people who rent in a condo hotel are still typical travelers, the owners are not. A long stay means they will be using public services, although they are not permanent residents.
Most of these projects are slated for travel hot spots, so you can see the advantage of owning such a place. You would not need to call around looking for lodging and you know that you will receive first-class treatment during your stay
The lingering question for some real estate experts is: do they have lasting value? Like any other property, these units can depreciate. If the destination ceases to be attractive or when things are slow in the travel industry, ownership in a condo hotel can be more of a burden than a boon.
Here are a couple of website that can give you more information on this trend:
National Association of Condo Hotel Owners
