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Condotels
Old 07-06-2006, 07:36 PM   #1
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Condotels

Anyone know if Condotels (Condo/Hotels) are a good investment? Cash flow wise or appreciation wise? Thought it might be a good idea to have the flexibility of staying in your condotel for weeks or months in your retirement at the same time as collecting revenue when you are not there.

Any thoughts or condotel investors care to comment?
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Re: Condotels
Old 07-07-2006, 01:11 AM   #2
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Re: Condotels

I looked at one on Maui. It was small but nice, across from the ocean. Downstairs was a hotel. The hotel would handle all your rentals for a fee. House keeping was also done by the hotel.

In this case I found rentals on the islands too cheap in relation to buying a condo. I remember renting a condo there 20 years ago for about $100 a day. It is the same or less today.

On the other hand, if I wanted to really consider living there for even a quarter of the year, I would buy.

One of the few places I would buy a condo. Also, San Francisco, Chicago, New York, and I'm sure there are some others. But these I would consider "bankable".

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Re: Condotels
Old 07-07-2006, 07:56 AM   #3
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Re: Condotels

I have owned one in Florida for less than a year so still can't comment on cash flow history or price appreciation. In the few months I have owned the condo hotel it has generated between $900 and $4000 a month in gross income.

Like you my original reason for owning a condo hotel was to have a place to hang out (and enjoy a beachfront property) and hopefully realize some price appreciation. Once I saw what I was giving up in rental during the high season, "hanging out" became less important . Maximizing rental income became the new objective.

Since many of these condo hotels do not have an established rental history, before making the investment, make sure you understand the rental policies -is it by the month, week or day? What is the rental management company's cut? What other fees are assessed? What is the reputation of the rental co? How often will you use the unit ?
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Re: Condotels
Old 07-07-2006, 08:40 AM   #4
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Re: Condotels

My DH and I are investers in a condo hotel development.* We don't own a unit; we invested in a conversion project which is selling units now.* Here is a thread that talked about our investment, which some here advised against: http://early-retirement.org/forums/i...p?topic=3120.0


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Re: Condotels
Old 07-07-2006, 08:51 AM   #5
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Re: Condotels

Quote:
Originally Posted by Martha
My DH and I are investers in a condo hotel development.
Curious as to where it is in our fair state.

I have seen new units on the beach in Clearwater, luxury type marketing, midsized units at a claimed $500-550/sft. We have thought about this.

Condo fees worry me (31-50 cents a foot per month for standard condos), but I guess as an investor it's just another item in the expense column which gets reflected in the rent you ask.
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Re: Condotels
Old 07-07-2006, 09:03 AM   #6
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Re: Condotels

Quote:
Originally Posted by Rich_in_Tampa
Curious as to where it is in our fair state.

I have seen new units on the beach in Clearwater, luxury type marketing, midsized units at a claimed $500-550/sft. We have thought about this.

Condo fees worry me (31-50 cents a foot per month for standard condos), but I guess as an investor it's just another item in the expense column which gets reflected in the rent you ask.
It's on the ocean side:* Pompano beach.* About $825 a square foot.
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Re: Condotels
Old 07-07-2006, 09:38 AM   #7
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Re: Condotels

Looked at these in ski country ... but the management fee scared me .... drum role please .... 40% !!!

Hard to see a profit after you pay 12% to taxes, 15% to maintenenace, vacancy (XX% put your best guess here for a weekly, seasonal rental; 20/30% would not be uncommon), insurance, condo fees ...

If you carry a mortgage ... you're carrying a negative cashflow.
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Re: Condotels
Old 07-07-2006, 11:25 AM   #8
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Re: Condotels

my barber bought into one on the icw in fort lauderdale. don't know the figures but last i spoke to her about it she was still pleased.

martha, if the one you bought into is wci's oceanside in pompano, that's right down from where i used to live when i was in high school and before that it was the beach where i used to visit with my grandparents when i was a little kid, as they moved here years before we did. i passed by the other day for first time in long time, what a shock to see the change (like i shouldn't be used to change in south florida).

personally i'm against these hybrids as they are often used to skirt density requirements. the developers get away with it by claiming that owner's won't be full-time residents but there's really no way of enforcing that. also they get away with providing less parking spaces because owner's supposedly don't live there full-time. that means they get to develop even more units because they don't need that space for parking and then density is screwed even moreso.

such issues were almost brought to light at one point of the redevelopment of fort lauderdale beach but then quickly swept under the sand.
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Re: Condotels
Old 07-07-2006, 02:59 PM   #9
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Re: Condotels

Trump is building a condo/hotel here in Panama and they are selling condotels for 200k. The rooms are about 400 sq ft so you're paying about $500/sq ft. With all the condo construction going on here it just seems the market is saturated and only going to get worst. But with no taxes for 20 years on new construction, who knows what might happen. It will be interesting to see if they get them sold, particularly the 500k 3 bedroom condos in his building. The building will be overlooking the Pacific ocean but geez that's a lot of coin for Panama.
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Re: Condotels
Old 07-07-2006, 05:00 PM   #10
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Re: Condotels

I would avoid it like the plague
Although I would of jumped in with both hands if Martha needed additional partners for what she did.
We do have one guy that has invested heavily into these. As with many people I dont think he plans on keeping it once the construction is done.

You can run the numbers to see how many days it needs to be occupied for you to break even on cashflow. They dont seem to appreciate as much as regular housing. As mentioned they come with loads of built in cost. You can possibly do better if your handy with a webpage and rent them out yourself. The one I looked at took a smaller chunk if you did that. Wear and tear on a beach front hotel or the disney rentals I looked at are killer.

Personally I would rather just put my 10% down on a typical median value home in decent school district somewhere.

One thing is people will put this places they plan on visiting. It becomes a tax write off but its not that big a deal
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Re: Condotels
Old 07-07-2006, 05:33 PM   #11
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Re: Condotels

One thing DW and I discussed for retirement is selling our house and buying two small condos, one in San Diego (where we are now) and one in Hawaii. I'm not looking at Condo/Hotels for cash flow, but rather a cheaper alternative to owning a place I live in only part of the year. Our thought was to do first half of the year in Hawaii, and the second half in San Diego for Holidays, family gatherings, etc. Plus, downsizing allows me to move without resetting my California property tax rate.
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Re: Condotels
Old 07-07-2006, 06:32 PM   #12
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Re: Condotels

Do condotels make good investments ?
http://www.bankrate.com/brm/news/rea...20060504a1.asp

The one I looked at was a tiny hotel room.
http://tinyurl.com/mxcnx
They actually bait and switched me. They had a listing for something that has sold.
Rob
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Re: Condotels
Old 07-07-2006, 06:50 PM   #13
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Re: Condotels

Panama is cheap compared to who Trump is doing in Hawaii. Trump is also planning a condotel in Waikiki, Honolulu in Hawaii. I think they're starting from US$500K for 500 square feet up to $7 million for 3000 square feet. That means minimum $1000 per square feet!

Agree with some of you that it could be interesting living in one for 3 or 4 months or even half a year.

Does anyone know of anyone who actually owns a condotel unit....say in Hawaii, NY, or any other highly desirable location?

Like to find out appreciation potential and cash flow potential.

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Re: Condotels
Old 07-07-2006, 07:12 PM   #14
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Re: Condotels

Quote:
Originally Posted by Arif
Trump is building a condo/hotel here in Panama and they are selling condotels for 200k. The rooms are about 400 sq ft so you're paying about $500/sq ft. With all the condo construction going on here it just seems the market is saturated and only going to get worst. But with no taxes for 20 years on new construction, who knows what might happen. It will be interesting to see if they get them sold, particularly the 500k 3 bedroom condos in his building. The building will be overlooking the Pacific ocean but geez that's a lot of coin for Panama.
Like I mentioned in my later email, Panama is cheaper per square foot than what is being offered in Waikiki, Hawaii by Trump. Granted however, I think $500/sq. ft is pretty expensive for Panama.
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Re: Condotels
Old 07-07-2006, 08:40 PM   #15
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Re: Condotels

Hi
The one down the road from me is 600-$650 per square foot in hollywood florida. He is working on one in Miami as well .
Rob
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Re: Condotels
Old 07-07-2006, 09:39 PM   #16
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Re: Condotels

Danger..danger..Will Robinson
$ per square foot is prolly the last figure you should be looking at.* The Devil is in the details. Who/what/where/when/why? Just like timeshares the potential problems are the "fees" mgt/maint/cleaning/etc.* You're now in the Hotel Business!

I bought a condo in Diamond Head 2001 $387sf now $791sf.* 18 months later another purchase for $295sf now $445sf.* First rents for $1400Month.* Second rents for $2500MO.* Get more for the second because I can rent short term!* Trump Waikiki will probably go for more than $500sf unless they're planning to make up for it in the "fees".* It is a good location altho not on the beach but views are protected because Ft DeRussey is across the street and has a nice beach.

People let timeshares go because they're tired of paying the fees.* If you don't have control of the condotel fees you're screwed.
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Re: Condotels
Old 07-07-2006, 11:14 PM   #17
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Re: Condotels

honobob - For some condotel projects it is not mandatory to participate in the hotel rental program, so I guess that means you can rent it out yourself short term or long term. Is this what you are recommending? In other words, to not participate in the hotel rental program. I guess that would mean it is really a condo then right?

I know what you are saying that it is all in the details. I hate the idea of splitting 50% with a 'hotel management company' when you can do it yourself. But from what I can figure out, I think Honolulu is a good location and it sounds like that your investments have worked out very well would you say? Double checked Trump's Waikiki project and it looks like he will be starting out at $1000 per square foot! $500K for 500 square feet!

Anyhow, you sound like you know alittle about condotels, so if you have any more information about condotels in Honolulu, it would be beneficial....us Canadians always like tropical paradises.....especially for our retirement.
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Re: Condotels
Old 07-08-2006, 07:51 AM   #18
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Re: Condotels

Quote:
Originally Posted by Canadian Girl
honobob - For some condotel projects it is not mandatory to participate in the hotel rental program, so I guess that means you can rent it out yourself short term or long term. Is this what you are recommending? In other words, to not participate in the hotel rental program. I guess that would mean it is really a condo then right?

I know what you are saying that it is all in the details. I hate the idea of splitting 50% with a 'hotel management company' when you can do it yourself. But from what I can figure out, I think Honolulu is a good location and it sounds like that your investments have worked out very well would you say? Double checked Trump's Waikiki project and it looks like he will be starting out at $1000 per square foot! $500K for 500 square feet!

Anyhow, you sound like you know alittle about condotels, so if you have any more information about condotels in Honolulu, it would be beneficial....us Canadians always like tropical paradises.....especially for our retirement.
Most all projects do not require you to participate in the rental pool because of securities law problems. But, you really want a project where people participate to keep the management company earning money and running a smooth operation. Nothing worse for a hotel's reputation than bad management.
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Re: Condotels
Old 07-08-2006, 10:30 AM   #19
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Re: Condotels

Quote:
so I guess that means you can rent it out yourself short term or long term. Is this what you are recommending?
Insurance is an issue if you decide to manage it yourself. Must live within 20 miles to proclaim yourself the "manager". Any fire and/or liability insurance will want 24 hour management coverage minutes away.

I was able to find a "property manager" to meet the insurance requirement for 20% of rents. His cut comes from his clients ... I can rent it myself and pay no fee. Barebone is 20%; list on his site; access to his cleaning service for an added fee.
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Re: Condotels
Old 07-08-2006, 11:23 AM   #20
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Re: Condotels

Canadian Girl
I'm not against participating in a hotel program I just think you have to be very aware of what you're signing up for. I checked out the Royal Aloha in Waikiki back in April and they have two rental programs. One was a percentage of the rental income minus fees the second was a guaranteed monthly income. Guess which unit gets rented most often. Even in Waikiki the occupancy rate runs 75-85%. The guaranteed money was less than what I could get if I invested in a rental condo. The property is not unique in any way so there was no incentive for me to buy.

Honolulu has been very good to me. I first purchased in 1978 for $35K, the Japanese came and it jumped to $125K shortly after but then when the Japanese economy tanked it dropped under $100K slowly rising to $140K and stagnated there for TEN YEARS. The boom has been going since 2000 and now it would sell for $400K.

I did get excited about the Trump project but another purchase would delay ER and I'm working hard to get out of the acquisition mode. I think the $500K 500sf units will be in high demand but at that price I bet they are lower floors and non view side.

Before I bought I rented from a couple from Canada who retired there and purchased a 2 bedroom/two bath that is set up to split into a 1bedroom and a Studio. I think I rented the studio for $250mo and now those go for over $1000mo. They're still there too!



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