Money was flowing and almost anyone could get a loan for almost any kind of real estate. Hotels and some motels were being converted into condominium type units. That was a few years ago. Things are a little different now. Prices are down and seem attractive to many buyers.
Condotels or condo hotels are converted motels and hotels. Hotels and their facilities are converted into condominium type units that are sold to individuals for their own use and as rental units. It seems simple, but that ’s not always the case. Different buildings have different sales conditions and restrictions after purchase.
Many of the rooms don’t have kitchens – they are simply converted hotel rooms. The features and style of the rooms will vary from building to building. If the converted hotel was a luxury building, the converted units tend to be nicer. On the other hand, there are some low-end conversions that a no more than basic hotel rooms.
Every building is different and is sold and managed in a different way. This can be frustrating for buyers trying to compare different units in different buildings. The rules, restrictions and fees can vary greatly. Restrictions on a maximum number of days you can stay, the share you receive of rental income, and whether the management company collects fees whether you rent the unit privately or they rent through their efforts.
Financing a condotel can be more difficult than a conventional condo. Few lenders, probably less than 3%, have programs for condotels. These loans will require higher down payments than other loans and will likely be at higher interest rates.
Condotels can be attractive to a lot of people who are looking for a vacation property with some income potential. You might be surprised at the quality of many of these conversions, they are really very nice. Amenities can be nice too. Some are in great resort towns and popular vacation destinations.
We would warn any buyer against thinking that the rental income from a condotel will pay the mortgage, taxes, insurance and management fees. It may offset the expense to some degree, but only in rare cases will a buyer have positive cash flow.
You should find a real estate agent who specializes in buying and selling condotel and condo hotel units. This may not be as easy as it might seem. Many agents are not interested in selling these properties. The sales prices are often low and the transactions can be complex. A specialist will know about the buildings and can help you understand the differences and similarities from building to building.
When buying a condo hotel, you must take great care to understand what you are buying and the contract you are signing. It makes sense to have a lawyer review the documents and help you understand the restrictions, fees and other owner requirements for the building. You need to protect yourself when buying a condo hotel.
Lynn Byrne has been selling real estate in the Daytona Beach, Florida area for 13 years. She specializes in Ormond Beach Homes for Sale, visit Lynn’s Daytona Beach Real Estate Blog for lots more information.
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Tags: Buying Condos, Condo Hotels, Condos, Condotel, Condotels, Home, Homes, Real Estate, Vacation Homes