Orlando Condo Hotel Central
What are condo hotels?
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
What are the benefits of condotels?
There are many! What most people do is have the management rent
the units out for them to defray the costs, and sometimes even creating
a positive cash-flow. If you feel like going on vacation, you just call
up the management company and let them know that you'll be using your
unit on specific dates, and they set it aside so no-one else uses it.
Who buys condo hotels?
How do condo-hotels differ from timeshares?
How much do condotels cost?
Condotels have a vast range in price. This is another benefit of condotel investments. No matter what your price range is, there is something out there for almost anyone. Most range between $200,000 and $500,000, but our brokerage have purchased them for as low as $145,000. If you're a big spender, the can cost millions for a single unit, so regardless of your price range, there should be something for you.
Who are the SEC and how do they affect condo hotel sales?
Please click on this link to learn why Realtors cannot sell you a condo hotel based on potential income.
How do Condo-Hotels Work?
By no means a novelty, the condo-hotel model is showing resurgence due to rising condo prices and the current "Midas Touch" perception of residential real estate.
The most successful condo-hotels are those built as hotels first and then as condominiums second, as public space is needed to sell hotel rooms, while unit owners share in the popularity and success of the lodging operation. Alternatively, many deals have floundered where the developer built the tower as a condominium, and later sought to create a rental program and piece together the public space and amenities.
For a hotel to operate smoothly when a different person owns each unit, it is imperative for a management company to have a contract with the owners. The management company can be either the developer of the property, or a group directly related to the developer. However, more increasingly the management company is a third party hotel operator, such as Hilton, Hyatt or Four Seasons, among others, that the developer and unit owners agree should manage the guest rooms for the unit owners, and the facilities (such as food & beverage outlets, recreational amenities and meeting space).
The industry is currently shifting its strategy toward the outright sale of the hotel management opportunity to nationally affiliated hotel companies, operating these properties similarly to that of a conventional hotel operation. This has been achieved by separately deeding all of the hotel-like features mentioned earlier as individual condominium units; these commercial condos are then sold to a hotel operating company. Along with rental agreements from the individual condo buyers, this allows the hotel operator to effectively manage the property as a hotel.
In order to place a unit in a rental pool program, a management and rental agreement is first signed between the unit owner and the hotel management company. This agreement provides for a number of variables, primarily:
Responsibility for the maintenance and repairs of common space is allocated among condominium unit owners, based on their pro-rata shares. A Homeowners’ Association (HOA) is usually set up to retain ownership of such areas and oversee the collection of dues from unit owners. These dues typically cover reserves, common area maintenance, and property insurance and utilities expenses. Property taxes are usually paid for directly by the condo owners, and the hotel manager pays for its costs of operations, such as salaries and other direct hotel expenses.
Additional particulars pertaining to the successful operation of condo-hotels are highlighted as follows:
The Condo Owner
For the condo buyer, these types of developments can offer enhanced financial returns when owners choose to place their units in a rental pool. Individual owners usually can put their units in the hotel-room rental pool while they're not using them and get a portion of the proceeds. Better yet, they get access to the same amenities and services as hotel guests.
By capitalizing on a hotel’s national affiliation, reservation system, brand recognition and management expertise, unit owners are more likely to receive a higher level of rental income through a rental pool agreement with a recognized professional operator, despite having to share a portion of their units’ revenues. Due to the high demand for accommodation near the theme parks, many hotels are dropping their branding as the hotels are showing good occupancy without the extra cost of paying for a brand name.
The Condo Developer
The condo-hotel structure offers a number of potential benefits for the developer. First, it provides a method to help finance the development of hotels; the sale of units gives the developer an assured source of revenue to repay a portion of the construction loan upon the completion of the hotel, and the closing on the sale of the units. Additionally, a developer can benefit by marketing the hotel amenities to a buyer.
Developers of successful projects generally can obtain construction financing without reaching the lending threshold of 50% presales for a planned condominium development (along with a 20% down payment on the loan amount). Developers of condo-hotel projects are attracted to this development approach due to their ability to quickly "monetize" the management function of the property. That is, the sale of the hotel management opportunity becomes similar to another condo unit that can be sold for immediate profit. If the hotel management opportunity is sold upfront during the sell-out phase of the residential condominiums, the developer may be able to receive rental revenues from the completed (and sometimes unsold) units being rented to hotel guests.
In developing this tier of property in the U.S., it is important to note the potential for securities law issues to arise out of the sale of condo-hotel units. The sales of condominiums may be deemed to be the sales of securities if certain conditions stipulated by the SEC exist at the time of sale. However, in order to avoid coming under the scrutiny of any securities agencies, or being obligated to register under the Securities Act of 1933 (both costly and time consuming), developers may take several measures while planning condo-hotel projects.
Although still unknown how units will sell a second or third time condo-hotels currently offer a means to finance construction of new properties. There is little doubt that condo-hotels are an intriguing approach to the development of lodging properties, and as its use becomes more common in the market, levels of understanding by both the lodging industry and the condo-buying arena are projected to increase.
Q - How do I get started?
A - Contact us so that we can discuss what your goals are and how we
can get you ready to purchase your second home or other investment properties
A – We have several really good and competitive Lenders we will introduce
you to. These Lenders will help you work with the equity you may have
in your current home and help you finance your second home or investment
property in whatever way is best for you.
A – We will only use Lenders that stay competitive. We do not benefit
from the Lending process, therefore, we will only refer you to Lenders
that are prepared to put you on the top of their list of priority clients.
A – Of course, everything depends on the quality of credit you have.
With that in mind,you can obtain 100% financing for a second home if you
have an excellent credit history. We also have 5%, 10% and 20% down financing
if your credit is less than perfect. There are adjustable rates, interest
only programs and the traditional amortization products available to you.
A – Depending on your goals, we can accommodate any type of strategy
your may want to follow.
A – We are fully knowledgeable and experienced in the 1031 Exchange process
and we are prepared to assist you with your trade for new properties.
A – Yes. Please contact us for more information.
A – Before we work a particular area, development, or county, we prepare
by arranging for good Property Management. The Property Manager will arrange
to get and keep your property rented, take care of maintenance issues
and send you your monthly income check so you can pay your mortgage.
A – Florida is still affordable. Florida is appreciating steadily and
rapidly. Florida 's economy and population is growing. All things considered,
a purchase now, in Florida, will help you grow your retirement fund, allow
you to increase your net-worth and help you make an eventual move to the
Sunshine State if that is part of your goals.
A - You may choose to call us but, if you e-mail us and take the time
to explain Who? What? Where? When? And Why? We can respond to you quickly
Hotels turn in strong performance
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