A NEW TREND IN REAL ESTATE INVESTMENT.

1151 Words3 Pages

BY. TJ WHITE

What could be more perfect than owning a luxury vacation home at a world class resort and receiving rental income whenever you aren't using it? Condo hotels are the newest trend in vacation home ownership. Live in it when you're there, and rent it out when you are not.

So how do condo-hotels differ from owning a traditional condominium or vacation apartment? They aren't your typical second homes.

They are beautifully furnished condominium suites in some of the most famous hotels and resorts all around the US. The properties are typically large, high-rise, luxury hotels. Prices can range from $250,000 to over $1 million for prime condo hotel properties.

When the owners of condo-hotel units aren't using their units, they have the option of placing their unit into the hotel's rental program. This is what makes the program so attractive.

While the developer doesn't guarantee the rental of the unit, by capitalizing on a hotel's name recognition, advertising, national affiliations, centralized reservation system and management expertise, most unit owners typically receive a higher level of rental income than they would from a traditional vacation home.

As part of the rental agreement, the hotel pays for most operating expenses such as marketing, housekeeping, and administrative costs. The condo-hotel owner typically pays for insurance, real estate taxes, and capital improvements.

Condo-hotels are typically large, high-rise, luxury hotel buildings operated by big names such as Four Seasons, Ritz-Carlton, Sonesta, Starwood, Hilton, Trump and Rosewood.

Each condo-hotel unit is sold to individual investors who may use their unit for a specified amount of time, and when not used the investor has the option of placing it into an organized rental program. Rental revenue is shared with the operator and helps defray the unit owner's expenses.

Unit owners are more likely to receive a higher level of rental income by being in a rental program with a recognized professional operator because of the hotel's national affiliation, its reservation system, brand recognition, and management expertise.

The original developer intends to sell the units. For that reason features are generally added to enhance the appeal of units to potential buyers. These include spas, health and fitness centers, and business centers. Many condo hotels also offer an expanded array of services such as a concierge, valet and maid service.

Most condo-hotels are located in seasonal resort areas. South Florida is one of the country's hottest markets with world-famous resorts like the Fontainebleau, the Ritz-Carlton Key Biscayne, Trump International and Four Seasons leading the way.

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