Does anyone have any experience buying or selling condo hotels?
I have been informed of a condo hotel that is being sold in a Holiday Inn in Orlando, that is a mile away from Disney land. It is being sold for $169000 and the based on past history, a 70% occupancy is expected on average. If that is the case, the property should cash flow me around $250 - $300 a month.
But since I have never purchased this kind of property before, I am not a 100% sure at this point.
Property management fees for finding nightly renters and all the associated services can be exhorbitant, usually 30-50% of gross revenue.
Is this new construction? All caveat emptor rules apply… significantly more exposure than typical condos to ADA claims, etc. How well established/experienced is the developer? How is their track record?
Will they share their marketing/revenue projections with you?
There is going to be a split of 60-40. That is 60% of the revenue will go me, and 40% of the revenue would go to the management company.
All is all, this property sounds like a good cash flow property, since it should net me atleast $200/month.
This is a hotel that was contructed in 1992, but the developer is spending about $10 milliion to bring it up to date. The hotel currently operated under the Holiday Inn banner.
Do you think condo hotels would be easy to sell if the need be?
I’ve always thought they were a good idea if you want a vacation place in a nice area and want to defer your costs some vs buying it outright and getting nothing back. I don’t know just how good they are as an investment and am suspicious of any of the quoted numbers I’ve seen as the person selling the units is the one providing figures (it’s obviously in their best interest to fudge the numbers up). As far as I’m concerned if it cuts my cost of ownership in half I’ve won already and have a nice place to stay when I go to FL or wherever it is. If you live elsewhere you can only go there 3-4 weeks a year tops, you might as well have people renting it out and defer most or all of your cost. And if it appreciates over the next decade or so that you own it and you can cash in all that free (provided by guests) equity build up and the appreciation you’ve really won.