The world of condo-hotels has experienced an explosion in South Florida over the last 8 years. We had a large number of foreign investors that financed many new construction projects in South Florida. Using the EB-6 Visa, foreign investors had the opportunity to obtain United States residency by investing in the U.S. The system also works perfectly for hotel chains. They bring their know-how, systems, corporate standards of service and luxury and share the cost and risk as hoteliers with the condo- hotel buyers. The buyers love the idea of having the flexibility of no stress renting of their apartment for all the months that there are not going to use it in addition to having an income!
As a Realtor, I can take you to the sales center of any of the new pre-construction Condo-hotels and negotiate and help you make the purchase, but when we ask for the hotel income numbers ……we will be directed to the hotel administration. A Realtor or member of the condo-hotel sales team cannot tell you any income numbers or advise you of the investment potential. We can’t act as an investment advisor. The hotel administration can tell you the what they think your income/return on investment may be, but it is truly just a guestimate. They can only guess/predict what the occupancy rate. They will use statistics and projections, but only time will tell how accurate they might be.
Most of the condo hotels offer you a selection of different hotel programs. The less time you use the apartment, the better the split or amount of the rental income you get. The hotel administration will also tell you what the percentage they take for reserves for future improvements and upkeep of the hotel suites. Every so often they will need to replace the furniture and housewares.
The only thing that the administration of the hotel cannot tell you is what will be the percentage of reduced rates they will take, and that little piece of information can drastically change your numbers. There are online deals, American Express hotel deals and other credit card deals and points that will apply. Usually, guests that book their hotel using those discounted rates will be spending their vacation in your apartment.
As a condo-hotel owner, in many cases, you have the opportunity to rent the apartment outside the hotel program by yourself with the help of your real estate agent and advertise on vacation rental websites. You need to consider that you will need to set aside a portion of the rent to pay city and hotel taxes. A good practice would be doing monthly rentals. You may not have the same traffic as nightly rentals but the upkeep of the apartment will be lighter. Here are some simple rules to see if a condo-hotel is for you.
Who is the perfect Condo – Hotel buyer?
- You are planning to come once or twice a year to South Florida.
- Your vacation days are planned months ahead.
- You want to OFFSET your real estate carry-on expenses.
- Your new condo-hotel is your favorite hotel flag.
- You travel around the world and can take advantage of the inside deals on other locations.
- You travel light and can confine all your personal belongings that you would like to leave the apartment in the owners closet.
- You are not picky about beautiful but standard houseware, linens, furniture.
- When you are on vacation, you don’t want to play house and spend time in the kitchen.
When not to buy a Condo – Hotel?
- You want to have a rental property that you can know ahead of your yearly return on your investment.
- You are planning to reside in the apartment more than 6 month a year.
- You would like to share the apartment with your family members at different times of the year.
- You want to make Florida your homestead.
- You are the antithesis of the perfect condo-hotel buyer.
- Looking for fast real estate appreciation, condo-hotel units appreciate on a slower pace that regular condominium.
- Looking for bank financing, there is very limited financing on condo-hotels or financing may not be available.