Condo Hotels FAQs
What is a condominium hotel?
Who are the condo-hotel buyers?
Can the purchase of a condominium hotel be financed?
How do condo-hotels compare to traditional vacation condos and single-family homes? How do condo-hotels compare to timeshare?
How are the units furnished?
What does the monthly maintenance fee include?
How can buyers choose a good condo-hotel unit?
Does each unit owner have to participate in a Rental Program?
How long is the term of the Rental Program Agreement?
How will revenue from the Rental Program be paid to owners?
Where can I get more information about my purchase of a condo-hotel unit?
Once I have purchased my condominium hotel real estate, how do I watch and track the events that affect the value, and how do I monitor my purchase?
Q: What is a condominium hotel?
A: The condominium hotel, or condo-hotel, is one of the hottest concepts in the lodging and real estate industries today. In a condo-hotel, a buyer makes a fee simple purchase of a deeded condominium. When in residence, the owner has full access to the amenities and services of the hotel. When not in residence, the owner has the ability to make his or her unit available for rental to other guests. Room revenue that is generated through the hotel rental program is shared between the unit owner and the rental program operator. The condominium can be sold or transferred at any time.
Condominium unit owners incur a monthly Homeowner's Association fee for budgeted maintenance, administration, and operating expenses. Unit owners enjoy a range of hotel facilities available in their resort home such as a fitness center, heated spa and pool, business center, food & beverage outlets, as well as access to in-unit services such as high speed Internet access, etc.
Buyers can enjoy their resort area vacation home without maintenance worries. Plus they have the opportunity to recoup some of their costs through hotel rentals on their own or by utilizing the services of a rental program manager. The condo-hotel provides an owner an opportunity to hold and enjoy a valued product, and over time to build real estate value.
Q: Who are the condo-hotel buyers?
A: Typically condo-hotel buyers are vacationers who appreciate the many services and hotel amenities that are available in resort areas. The appeal of condo-hotels is not limited to U.S. buyers. The concept has received international attention.
Q: Can the purchase of a condominium hotel be financed?
A: Condo-hotel purchases may be financed through a lending institution just as any other real estate purchase. 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 unit being purchased.
Q: How do condo-hotels compare to traditional vacation condos and single-family homes? How do condo-hotels compare to timeshares?
A: Condo-hotels are not the typical second or third home. They are luxury furnished condominium suites. Owners have access to all the amenities and services of the hotel. Like a traditional vacation home, owners can use their home as they wish. However, unlike a traditional home, they have the option of enrolling in a rental program. Ownership is hassle-free as all maintenance, utilities, and other issues are handled either by the Homeowner's Association and or by a professional management company.
With a timeshare, owners are typically allotted just one or two weeks of the year to use their condo. Timeshare can be the same week every year unless the owner goes through a process and expense to exchange time with someone. (The condo-hotel also makes this exchange option available but with greater flexibility.) With a condo-hotel unit, owners have deeded ownership to their unit and can use it any time they want. Finally, timeshares can be difficult to resell, even if the seller is willing to take a loss. On the other hand, condo-hotels, because of their prime locations, limited inventory, actual fee deeded real estate ownership, and upscale quality, are a highly desired commodity.
Q: How are the units furnished?
A: In order to ensure and maintain high standards for the resort, the Developer and management company will work together to design and select the furnishings for each condominium unit. The unit will be fully furnished when you buy it. Typical finishes will include contemporary furniture, luxury bedding, granite countertops, and state-of-the-art technology such as flat-screen TVs, DVD and CD players, and wireless Internet access. However, the condo-hotel owner is free to bring any personal items while they are staying in their unit, items which are either taken with them when they leave or placed in storage.
Q: What does the monthly maintenance fee include?
A: The typical monthly maintenance fee includes cable, plus homeowners’ association fees for grounds maintenance, resort amenities, and property management. These fees can and will increase over time to provide for standard building maintenance, to keep the property modern, and to support future redecorating to maintain the value of your property for years to come. Maintenance fees will vary from one property to another, depending on the amenities included at each location.
Q: How can buyers choose a good condo-hotel unit?
A: Research on the Internet or work with a real estate broker who specializes in condo-hotels and can discuss the pros and cons of all products currently on the market. Be aware of the importance of the project's location. Select an area where you can expect to have business driven to your property such as near a major convention center, a large metropolitan area, theme parks, or resort areas. Make sure the resort units and amenities will appeal to your family and also to those who will be renting the unit.
Q: Does each unit owner have to participate in a Rental Program?
A: No. A condo-hotel rental program is generally offered to all prospective owners. Purchasers should be provided with the Terms and Conditions of the rental program. Those who intend to place their condo-hotel unit in the rental program are strongly encouraged to review these Terms and Conditions carefully before making a non-refundable deposit. A designated representative of the hotel should address all questions about the rental program. Sales associates have no authority to discuss the rental program’s Terms and Conditions.
Q: How long is the term of the Rental Program Agreement?
A: The rental program manager typically will require that the condo-hotel owner sign a rental program agreement with a term of at least one year.
Q: How will revenue from the Rental Program be paid to owners?
A: The Homeowner’s Association or professional management company will pay directly to the owner the net revenue, after expenses, which is generated from the rental of an owner's unit. The revenue of an owner's unit is not pooled with that of other owners.
Q: Where can I get more information about my purchase of a condo-hotel unit?
A: Contact the condo-hotel management company and/or a third party such as the national association of condo hotel owners (NACHO) to learn more about product information and historical data.
Q: Once I have purchased my condominium hotel real estate, how do I watch and track the events that affect the value, and how do I monitor my purchase?
A: First you might want to subscribe to the local newspaper and watch the activity and growth of the area. Secondly, you may want to be actively involved in the homeowner's association (HOA) and watch the HOA's newsletter for activities that affect your property. You may also wish to monitor local municipalities including planning and zoning departments and follow public meetings for planning and zoning that affect the area.
The information provided in this list of frequently asked questions should in no way be relied upon or construed as legal advice. For specific information, the opinion of legal counsel should be sought.