Condotel Investing
Posted by Louis Franklin Cimafranca on Saturday, November 12, 2011
Under: Real Estate
Condotel means "Condominium-Hotel" where an investor can invest and buy a condominium unit and then rent it out to prospective users just like a hotel.
Tips on Buying a Condotel as a Rental Residence
"Condotels," also known as "condo hotels," are typically condominiums in resort or downtown communities. A condotel looks and feels to visitors like a hotel or resort, but in these resorts, individuals have the opportunity to purchase individual units.
Unlike a timeshare, where buyers pay for limited use of a resort, buyers of a condotel own their residence outright and can stay in it, rent it out, or sell it according to their own wishes.
In these communities, in-house management companies rent out the units on behalf of their owners in exchange for a percentage of the rental income. Condotel owners and their renters often have use of the resort's amenities, such as concierge, fitness and spa services.
Whether an owner can use the amenities while a renting guest is staying in the unit depends on the rules of the particular condotel development.
Owning a condotel differs from buying and managing a condo in several respects. Unlike typical condos built by multifamily housing developers, condotels are often developed by hotel and resort companies. The price you pay for a unit may be substantially higher than that for a "regular" condo.
For the extra cost, you have access to the services of an in-house management company, which will market and rent your unit out for long or short periods of time (even nightly).
The management company's rental program will charge you a portion of your rental income (typically 50%), and will handle the maintenance of your unit, groundskeeping and the clean-up after your renters leave. It will also oversee guest amenities such as pools, tennis courts and golf courses.
When looking to invest in a condotel, research the local real-estate market (e.g., are prices on the rise, or has the real-estate market peaked?). Study regional tourist activity and hotel occupancy, since a condotel unit, especially if it is run by a hotel operator, may be marketed like a hotel room.
The location of your unit has the potential of figuring prominently into how profitable an investment it is.
Some investors have had success with condotels because these destinations offer desirable tourist activities and because these buyers purchased at a time when area real-estate prices were appreciating.
If you buy before a condotel project is fully built, you may be able to purchase your unit at a lower cost, as developers tend to offer the lowest prices pre-construction. You may have to wait until the project is completed, though, before you can rent out your unit. Estimate how much you can fetch per night and how often you need to rent the unit out to bring in enough to cover your mortgage and other expenses.
Tips on Buying a Condotel as a Rental Residence
"Condotels," also known as "condo hotels," are typically condominiums in resort or downtown communities. A condotel looks and feels to visitors like a hotel or resort, but in these resorts, individuals have the opportunity to purchase individual units.
Unlike a timeshare, where buyers pay for limited use of a resort, buyers of a condotel own their residence outright and can stay in it, rent it out, or sell it according to their own wishes.
In these communities, in-house management companies rent out the units on behalf of their owners in exchange for a percentage of the rental income. Condotel owners and their renters often have use of the resort's amenities, such as concierge, fitness and spa services.
Whether an owner can use the amenities while a renting guest is staying in the unit depends on the rules of the particular condotel development.
Owning a condotel differs from buying and managing a condo in several respects. Unlike typical condos built by multifamily housing developers, condotels are often developed by hotel and resort companies. The price you pay for a unit may be substantially higher than that for a "regular" condo.
For the extra cost, you have access to the services of an in-house management company, which will market and rent your unit out for long or short periods of time (even nightly).
The management company's rental program will charge you a portion of your rental income (typically 50%), and will handle the maintenance of your unit, groundskeeping and the clean-up after your renters leave. It will also oversee guest amenities such as pools, tennis courts and golf courses.
When looking to invest in a condotel, research the local real-estate market (e.g., are prices on the rise, or has the real-estate market peaked?). Study regional tourist activity and hotel occupancy, since a condotel unit, especially if it is run by a hotel operator, may be marketed like a hotel room.
The location of your unit has the potential of figuring prominently into how profitable an investment it is.
Some investors have had success with condotels because these destinations offer desirable tourist activities and because these buyers purchased at a time when area real-estate prices were appreciating.
If you buy before a condotel project is fully built, you may be able to purchase your unit at a lower cost, as developers tend to offer the lowest prices pre-construction. You may have to wait until the project is completed, though, before you can rent out your unit. Estimate how much you can fetch per night and how often you need to rent the unit out to bring in enough to cover your mortgage and other expenses.
In : Real Estate