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Condo-Hotels
– A New Second-Home
Alternative to Time Shares
by Leon Altman
Condo-hotels have evolved as a better, more reliable second
home alternative to time-shares. They are usually attractive,
high-rise hotels on the ocean or in other prime locations,
and range in price from the mid $200,000s to over 1 million,
depending on the size, location, and amenities.
Many of the
biggest names in the hotel industry have condo-hotel buildings,
including Hilton, Four Seasons, Clarion, and Ritz-Carlton.
Donald Trump has numerous condo- hotel facilities across
the country, including a building in Fort Lauderdale and
another in Sunny Isles, Florida.
In general,
condo-hotel properties have been highly successful with
all or nearly all units selling out within months of the
first offering. For example, the Ritz-Carlton Key Biscayne
is a beachfront property with 188 condo-hotel units, all
of which sold out a year before the building was even finished.
Needless to say, the values of the condo-hotels in this
building have gone up significantly.
There are several
reasons for the popularity of condo-hotels. When you purchase
a property, you purchase a condo unit in the hotel. Unlike
a time share, you have access to the property whenever you
want, and it is put into a rental pool when you are not
in residence. Although developers can’t guarantee the
properties will rent, management by a well-known hospitality
group will typically result in several weeks of rental income.
This is one of the biggest appeals of condo-hotels because
the rental income can offset some of the costs of owning
a vacation property.
In addition,
the management company takes care of renting the unit, using
their connections and expertise. You don’t have to
worry about any of these details. Most rental agreements
split the income 50/50 between the management company and
the owner. However, some properties offer more favorable
arrangements, and this is another aspect to consider when
deciding which property to purchase.
Despite the
fact that the property is in a hotel setting, a condo-hotel
is considered a private residence, and owners are eligible
for mortgage interest deductions and all the other tax advantages
that come from owning a second home. However, most condo-hotels
do not allow you to live in the unit year round. This is
because the management company wants to rent out the unit
when you are not there, so both you and they can profit
from that rental income.
Each condo-hotel
property has its own residence restrictions that indicate
the maximum amount of time you can live in the property.
This is an important piece of information to consider before
purchasing a condo-hotel unit. Most owners do not intend
to live in their condo year round, so this is not a concern
in typical circumstances.
Why not just
rent a hotel room? In addition to the investment aspect,
condo-hotels usually offer more room than a standard hotel
room. Most suites are one or two bedrooms, and larger units
are available. Condo-hotels typically have cooking facilities
and other homey features that hotel rooms do not. This makes
it ideal to have family stay with you when they come to
visit.
With the advantages
they offer over time shares, it’s easy to see why so
many people looking for a vacation property investment they
can also enjoy when they want are now looking at condo-hotels.
For more on
finding and buying the right condo-hotel, check out Make
Your Next Home a Resort, the 2005 Guide to Condo-Hotels,
Fractional Shares and Resort Residences. You can download
the Guide as a pdf file at http://www.InvestingIN.com/realestate/resorts/resort4u.htm
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