A common sense guide to buying a condo hotel property.

The condo hotel marketplace can be a difficult and oftentimes confusing environment to navigate. Here are a few common sense guidelines to help keep you on track through your journey:

When deciding on purchasing a condo hotel:
• Purchase not just to obtain a real estate investment, but for multiple reasons such as personal use, to explore the location and to relish in the superior amenities. Seldom do such properties work as stand alone investments.
• Location, location, location. Find not only an area that attracts you, but also one that will attract others and will likely see real estate rise. Also, search in markets that are strong year round (areas such as New York or Hawaii) and not seasonal (such as Orlando).
• Look not only into the brand of the hotel, but the company that manages it. You’ll want a management company with a proven track record, professional service and high quality, consistent maintenance. In fact, oftentimes, the management company is as important or even more important, than the brand name of the hotel.
• Make sure you’re fully aware of the rental program and the HOA details that are set forth in your agreement. Are they fair, reasonable and productive? Do they allow for easy adjustment and/or termination?
• What is the owner occupancy of the building? How long has it been operating?
• Is every facet of the condo hotel operating efficiently? From housekeeping to monthly invoicing; the system is only as strong as its weakest link.
• Do it for yourself, your friends and your family first. Make the purchase more for vacation than for investment and you’ll be ahead of the game.

Disgruntled Condo Hotel Owners take action

A group of condo hotel owners in Florida are bringing a class action lawsuit against WCI Communities Inc, claiming that the developer sold them condo hotel units at the Singer Island Resort as unregistered securities. These owners claim they bought the units as investments and not primarily for their own use and now want out of their contracts. WCI has no comment except that they intend to vigorously defend themselves against the lawsuit.

Other condo hotel owners at the Trump International Hotel and Tower in Las Vegas are fighting to rent out their own hotel units using their own operator clamoring that Trump takes too much of their rental revenue. The owners are demanding their down payments back and claim they were promised a share of the profits from room rentals. At time of purchase, the owners claim claim they were enticed by talk of high-yield rental returns that would cover mortgage payments and HOA costs. Specifically, they were informed that their rooms would rent as high as $650 a night on weekends, to only then be told the figure would be closer to $240. A Trump spokesman said the company’s rental agreements are competitive with other condo hotel rental management companies in the area.

Article Resources:
Condo-Hotel Buyers
See Investments Sour by Michael Corkery, Sara Lin, and Ruth Simon
From The Wall Street Journal Online
Housing slide hits home for buyers of condo hotel units by Tim O’Reilly at lvbusiness.com
Condo-Hotels Under Pressure By KRISTINA SHEVORY from www.NYTimes.com