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Small Condo Hotel Unit Vs. Large

Question

Does it make sense to buy the smallest unit (studio) in a condo hotel as an investment? Can it appreciate?

Joel's Response


The answer to both of your questions is a qualified yes.

When picking a condo hotel, the size of the unit should not be your major concern unless, of course, your budget is. Studios, ones, and twos all will see a similar increase or decrease in appreciation, depending on the economy, the supply and demand in the market, interest rates, etc.

Focus on the following to insure a good investment:

Location: Beachfront properties in South Florida have done exceptionally well in recent years. Their appreciation has been significant. If you prefer a property that is not on the ocean, it's a good idea to select an area where you can expect to have business driven to your property, such as one near a major convention center or in Downtown Miami near the financial district.

Franchise: My advice is to go with a major company, well-known internationally. Four Seasons, Hilton, Starwood, Rosewood, Setai and Trump are excellent examples. Ask yourself, would you likely stay in a Holiday Inn for $69 or the independent hotel across the street for $62? Many investors or hotel guests will pay a little more for the comfort level they get with a well-known, well-respected franchise. They like the fact that there are usually no surprises when you stay in a franchise hotel.

Management Company: Compare the management companies and their rental sharing program. I would feel more comfortable investing my money in a condo-hotel with an experienced, top-notch management company vs. an independent operator.

Financing: When considering a studio vs. a one bedroom unit, consider financing. It is a little more difficult to obtain financing for a studio. The good news is that studio units are typically rented out more than ones or twos. That's because there are more people that travel on a budget than there are those who can afford a luxurious two-bedroom unit.

The above question was submitted via e-mail by a visitor to www.condohotelcenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.

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