Owning A Condo Hotel Apartment Guide
A condo hotel can be two things: it can be a newly constructed building with the aim of attracting people who want a vacation home, or it could be an old hotel updated and its units sold to the public for the same purpose. A lot of developments, especially in high tourist traffic areas all over the world, are condotels. What exactly is the appeal of this type of real estate investment, and what are things to consider before buying one?
Below, we discuss the pros and cons to give you a better picture of how it’s like to be an owner of one.
Double Purpose Investment
Half of purchasers simply want a second home; the other half want to have a real estate investment. The beauty of a condotel is how it brings these two purposes together. You can use it when you want a quick getaway from your usual surroundings. You can even move there for long-term.
When you’re not using the unit, the property’s management rents it out to local and international tourists, which you get profit from. If one day, you don’t want it anymore or would like to use the money you spent there on something else, you can simply sell it off.
Hassle-Free Passive Source of Income
Unlike running a normal airbnb, you don’t have to actively promote your unit because the property’s management does it for you. When people rent your unit, that’s the time the property earns as well, so they have to promote you. They take care of reservations, maintenance, upkeep, and other services that guests may require.
You save on advertising costs and time spent looking for renters. You can just sit comfortably at home and wait for your portion of the sales!
Great Resale Value
Because these properties are often located in prime areas like luxury resorts, beachsides, or busy CBDs, the land area is limited so the value of properties go up over time. If you got hold of a unit at the pre-selling stage, chances are you’ve doubled or tripled your investment when you finally sell it after it’s been in operation for a few years and the property has built itself a strong brand.
Real Estate Taxes, Insurance, and Other Duties
Just like any other real estate purchases, you’d have to pay real estate taxes for your condotel unit. Of course, you’d want protection as well in case something goes wrong, so insurance premiums should be in your budget. It’s also important to remember that the property that the unit is in is a business that has a brand and a certain uniformity of look and quality to uphold. But since you’re the unit owner, you’re basically a part-landlord, so any improvements or updates necessary due to wear and tear will be shouldered by you.
Not Always Available
Since guests’ bookings go directly to the property’s reservation system, it’s not always possible to use your unit in a pinch. You’d have to check with the management, and it could feel like you’re just another one of the renters.
Not Always Profitable
Due to the seasonality of some condo hotel’s locations, there could be long periods of low demand. If you own beachside unit, guests aren’t going to be there during monsoon season or winter. A bigger factor could be the “trendiness” of the general area. Sometimes another hot spot gets developed and all the people want to go there, leaving your unit collecting dust, and you having to continuously pay the fees.
The Big Picture
Owning a condo hotel unit can be a big advantage for you asset-wise. It gives you a sense of luxury, and it’s always nice to know that you have somewhere to go to to unwind without having to pay for expensive hotels. It’s also a great way to passively earn money. But it’s also good to remember that establishments containing condo hotel units are businesses. There are capital investments to be made as well as taxes and upkeep expenses.
The best thing you can do if you’re thinking about investing in one is to gauge the location’s traffic longevity. Pick one that is the most “evergreen”, maybe like places around the airport or near brand-name amusement parks or right in the heart of the city. These places almost never run out of visitors who need a place to stay. Shy away from party beaches and fad places and you should be alright.