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Seven Questions You Should Ask When Buying a Condo Hotel Unit
You may have heard all the buzz about the newest type of vacation home investment, condo hotels. These are condominiums located in four- and five-star hotels in cities like Miami, Orlando, Las Vegas and Chicago. Owners use their condos when they'd like. When not using their unit, they can place it in the hotel's rental program and receive a percentage of the revenue it generates.
How do you choose a condo hotel unit that meets your desire for a vacation home and is also likely to produce a healthy revenue and appreciate down the road? Consider the following seven questions when evaluating a condo hotels:
1. Is a condo hotel right for you?
Condo hotels are not your typical second homes. They are fabulously-furnished condominium suites in some of the most famous hotels and resorts around the country. The properties are usually large, high-rise, luxury hotels and come with premium amenities like valet, concierge and maid service. Prices can range from $250,000 to over $1 million for prime properties.
2. Is the condo hotel well-located?
Consider whether the property is located in a popular vacation destination, one that is likely to do a healthy tourist or business trade regardless of economic factors.
Also, you must be sure you yourself like the location. Does it offer you the ocean view or golf course access you always dreamed about for your vacation home? If you'll be flying to this vacation home, how close is it to a major airport?
3. Does the condo hotel have a major franchise?
The key to a successful condo hotel investment is the hotel operator. The better the operator and the franchise, the more likely the success of the property.
A condo hotel with a name brand like Ritz-Carlton, Hilton, Starwood or Trump is likely to generate more revenue than a non-brand because it can charge higher room rates and benefit from international advertising and a centralized reservation system.
4. Will the condo hotel receive traffic from any nearby attractions or entertainment venues?
A condo hotel that is near a convention center, a theme park or cruise port will benefit from proximity to these high-traffic venues.
5. Does the condo hotel have any on-site amenities that will draw guests such as a well-known health club, spa, fine dining restaurant or golf course?
You'll want to choose a condo hotel that has amenities you'll enjoy using and also are a draw to attract hotel guests.
6. Does the individual unit that you're considering in a condo hotel meet your needs?
Does it have enough bedrooms, enough square footage? Does it have a kitchen? (Some do, some don't.) Does it offer an appealing view? Is it furnished to meet your tastes? Does it offer any owner storage?
7. Will the condo hotel unit appreciate?
While personal enjoyment should be your primary reason for considering a condo hotel purchase, it's certainly worth thinking about whether the property you want has good appreciation potential.
Look at surrounding properties and area appreciation rates. Does the condo hotel have lots of competition? Is it different or better than area properties? How has the demand been since the property first came on the market?
A realtor who specializes in condo hotels and is familiar with the area in which you're looking can often help you determine if the condo hotel you're considering has good appreciation potential.
By Joel Greene
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