A Hotel Condominium Hotel Condominiums combine the rewards of condominium ownership with the pleasures of a world class hotel, creating an exciting opportunity for business and leisure travelers, and second-home owners. This represents the primary life-style difference between conventional condominiums and hotels condominiums.
Benefits of Ownership
• World class properties in resort and popular business destinations
• Management by the hotel industry’s premier operators
• Ability to share residence with friends and relatives
• Ability to participate in the hotel operators other real estate properties
• More flexibility than a traditional second-home or vacation property
• Ability to occupy a Hotel Condominium residence as much or as little as desired
• Full use of hotel services including spa, concierge, business center, health an other recreation facilities whether in or out residence (in most cases)
• Ability to purchase residence in volume
• Excellent vehicle for 1031 tax-deferred exchanges
• Ability to finance purchase
• Option to participate in developer lease-back program (certain properties only)
• All of the benefits of home owning i.e.: real estate taxes, maintenance fees,* insurance* an the ability to re-sell in the open market
*represents tax deductions under certain circumstances
When can owners use their Hotel Guestroom? Most Hotel Condominium ownership programs are highly flexible.
Owners typically may use their personal guestroom or suite as many nights as they wish or not at all. In other cases hotel operators/sponsors restrict the stay to a certain amount of days.
Who manages a Hotel Condominium?
The hotel is generally managed by a hotel operator. This operator not only manages the hotel’s reservation and rental program, but also markets the residences, takes reservations, operates the front desk, maintains the property, and provides the services hotel guests expect, such as housekeeping, food and beverage and concierge.
What hotel services and amenities are available to owners?
Hotel Condominiums are generally designed as high end resorts. Owners have access to all of the facilities that hotel guests enjoy and more.
• Valet
• Concierge
• Spa Treatments
• Room Service
• Maid Service
• World Class Restaurants
• Recreation
Personal services including dry cleaning, polishing of shoes, newspaper delivery, just to name a few!
How is the revenue from the hotel rental program paid to owners?
The net revenue, after expenses, generated from the rental of an owner’s* guestroom or suite is paid directly to the owner by the hotel management company.
*generally speaking, owners share in the rental income of their respective hotel room/ suite only.
What are the maintenance Fees of a Hotel Condominium?
• Regular Maintenance Fees(similar to conventional condominiums)
• Shared common Hotel Maintenance Fees
• Reserves
What is the cost for owners who use their guestroom?
• None (most hotel condominium programs do not charge their owners for daily use)
• In some cases owners that place their hotel room/suite in a Rental Management Program can still use their room/suite without charge based upon availability
• Some programs charge owners for a departure fee
• Some programs charge for room occupancy under certain circumstances
Can the purchase of a Hotel Condominium be financed? The purchase of a Hotel Condominium can be financed. Much like a “conventional” residential condominium purchase, the third party lender’s decision to make the loan will be based on the creditworthiness of the individual purchaser and the value of the residence being purchased.
How are rooms furnished?
• In order to ensure and maintain a high standard, the developer/ sponsor and management company work together to design and select the furnishings and fixtures in each guestroom or suite. All Hotel Condominiums are defined by elegant, high-quality furnishings throughout. Typical finishes include contemporary guestroom or suite furniture, luxury bedding, marble and granite baths, and state-of-the-art technology, such as flat-screen TVs, DVD and CD players and wireless Internet access. Personal items such as bath robes, slippers umbrellas and toiletries are also included depending upon the property.
• Some programs charge purchasers separately for the furniture package (FF&E). Others will include the package into the purchase price.
Condo Hotel Financing
The Second Home Mortgage Market an Evolution in Our Time 5 years ago…
• Higher rates for second homes
• Higher rates for condos, and even higher for high-rise condos
• Lower LTV’s for both
• Higher risk of default on second homes Today…
• Market rates & higher LTV’s, no add-ons, for second homes, condos, high-rise condos.
Just the Beginning of a New Trend
• Condo Hotel is the best vacation, retirement, second home & investment property alternative for savvy buyers.
• A Ground floor opportunity…
• South Florida is leading the nation…
• Not yesterday’s condo-motel…
• The “it’s timeshare myth”… freedom of use.
• The “it’s condo with a rental program myth”…
• Condo-Resort is a new breed of product…
• Condo Hotel = Luxury, the new breed of buyer/borrower
• The good projects make sense for everyone
• Some lenders are trying to package and sell this new product like a traditional condo loan, they aren’t.
The Luxury Lifestyle Buyer
• They aren’t buying a second home
• It’s about more that sunshine
• Pampered existence, the whole package
• FF&E- it’s not Free
• The whole package, one monthly payment
• An investment in a lifestyle, not just another rental property
• Why not just rent?
• The value of cocktail party bragging rights
What We See in These Buyers
• Luxury buyers are “A+” credits
• The kind of borrowers that bankers dream about!
• They can afford the payment, without the rental income, but are too smart to leave an asset under-utilized.
• Fractional jet owners and condo hotel buyers share many of the same desires and justifications
Loan Parameters Improving
• 80% LTV
• Lower rates than 6 months ago
• Interest only payment options
• Lines of credit available
• Multiple unit financing for ‘investment’ savvy buyers
• No escrow requirements, no PMI
• Full doc, with DTI up to 50%!
In summary
• We get Condo Hotel! We love them!
• A lot of lenders still think they are condos with rental desks and bell hop.
• We are closing loans, lots of them.
• We have made the loan process simple
• We do not lend to everyone, only the savvy financial people buy condo hotels.. are you dealing with savvy buyers?
My Condo Realty
305-662-5011
Information on this website is believed to be accurate but is not warranted and should be reconfirmed.Keyes Realtor
