Pros and cons of buying a 'condo hotel' suite
Published Wednesday, February 10, 2016 6:30AM EST
A condo hotel is a condo that operates legally as a hotel with a front desk and other hotel amenities. They are usually large high-rise luxury hotels operated by big name hoteliers. The hotels have condo units, allowing individual investors to own a full-service vacation home that offers amenities like spa, fitness, fine dining, business centre, housekeeping and more.
Conceptually, when the owner is not using their own unit they may rent it out themselves or enter it into the hotel rental pool where it would be offered as a suite for short term rental.
Ideally the rental revenue helps offset the owner’s expenses. The on-site management company takes care of upkeep, maintenance and interaction with renters making it hassle free home ownership.
Most condo hotels are meant for short-term occupancy and often stipulate the maximum number of days an owner may occupy the suite, with only a few projects allowing year round permanent residency. The owner may resell the unit at any time and retain the profits.
What to keep in mind:
- Many investors have lost money on this type of deal.
- The rents have been lower than anticipated.
- The maintenance fees are higher than most condominiums as there is a built in management fee and perhaps a refurbishment fee.
- Property taxes are higher than similar condos pushing the costs even higher.
- Financing can be an issue as only a few lenders are funding this type of product.
- When reselling this kind of product you are marketing to a very small pool of buyers making the demand low.