Condo hotels: the luxury income property
The classier cousin
of a timeshare, condo hotels (or Contels) are born from the same general idea: The use of a vacation property, only for a finite period of time (unless you decide to live there full time, of course).
That period of time varies from program to program, but the key difference between owning a hotel residence and a timeshare is that there is no joint ownership. You own the unit, and the hotel takes the role of property manager, and ensures that your property is occupied, cleaned and maintained when you’re not there.
Hotel condos or hotel “residences” as they’re deemed, are offered by high-end hotel chains like Ritz-Carlton and W Hotels. Hotel condos are a great option if you visit a certain location often, year after year, and (typically) around the same times.
Here in South Florida that could mean boat shows, conferences, holidays, food and wine festivals/ art shows, or just plain old vacation.
If you’re considering purchasing one of these high-end residences, here’s what you should ask: Q.
What is your revenue sharing program? A.
Because the hotel basically acts as a property manager, they’re entitled to a portion of the revenue gained from “leasing” out your unit when you’re not there. A traditional split is 50/50, but there are often fees that are taken off the top for administration and infrastructure. Depending on the program, these could take 12 to 17 percent off the top, before your 50/50 split — so make sure you know. Q.
Are there any blackout dates? A.
Hotels know they can charge top dollar at peak times, for example around Christmas/ New Year’s, or if there’s a special event happening like a conference or boat show. If you want to use your property during this time, you may not be able to. Ask for a list of the blackout dates and make sure you make any arrangements to use the unit way ahead of time. Q.
What are the maintenance/ HOA fees, and what does that include? A.
Like any property with common area like a gated community, condo or townhouse, there’s going to be costs associated with its ongoing maintenance. The more amenities you have, the more you can expect that to be. Things typically covered include security, pool and gym maintenance, and so forth. Q.
Is participation in your leasing program required? A.
Some condo hotels will require that you lease out your unit to hotel guests. Some won’t. Of course, if you don’t lease it out, you don’t generate any income off your property — but if privacy and accessibility is more important, a condo hotel where leasing isn’t mandatory might be for you.
Have more questions regarding condo hotels? Feel free to contact me for more information.