Because buying a condo hotel is an expensive proposition and an investment that you hope will eventually bring you a substantial return, it’s important to make an informed decision before you sign on the dotted line. Follow these eight steps to help ensure your success:
- Check out all the inventory
- Ask lots of questions
- Look at surrounding properties
- Check out your individual unit
- Shop around, then negotiate
- Read the fine print
- Explore financing options
- Move quickly
1. Check out all the inventory.
There are currently over 20 condo hotels in South Florida alone, and more coming. Each one is different. Some are new construction, others are renovations. Some are resort oriented, others are in-city. Some feature every possible luxury, others are less extravagant. Some are operated by big name franchises, some are independent.
By visiting different properties you’ll be better able to zero in on a condo hotel unit that meets your needs and personal preferences.
2. Ask lots of questions.
It’s your right and responsibility to ask questions, lots! Condo hotel units are not cheap. You want one that will appreciate and will cover as much of the expenses as possible while you own it.
The questions below should offer a good starting point:
- What are the pros and cons of the condo hotel’s location?
- What is the background of the developer?
- Who will manage the condo hotel and under what flag or franchise?
- What are the property’s amenities?
- Where will the condo hotel get its business?
- What are the room generators now, and what will they be in the future?
- What is the property’s competition today and potentially in the future?
- Does the condo hotel have any unique features that will attract business?
- If the condo hotel has been up and running, what is its history?
Getting answers to pertinent questions will help you evaluate the quality of the property and give you insight into how the facility will do in the foreseeable future.
3. Look at surrounding properties.
It’s been said that when buying real estate the three most important factors are location, location and location. The same could be said about condo hotels, but more so because condo hotels are a hybrid investment; that is, they combine an investment with some vacation home property features. Check out the neighborhood. The value of your condo hotel unit will be influenced by other properties nearby, not just other condo hotels, but also pure hotels and pure condominiums, those that exist now and others that are to be built.
4. Check out your individual unit.
In addition to selecting the condo hotel you like, you’ll have to choose a specific unit for purchase. While most units will be decorated alike and have basically the same amenities, you’ll still want to check out things like the view, the floor its on (higher floors tend to cost a bit more), and its location on the floor such as proximity to the elevators.
There’s no right or wrong to these decisions; just pick what you like. After all, even though your condo hotel unit is an investment, it’s likely also a vacation home that you’ll want to enjoy for many years.
5. Shop around.
You probably wouldn’t buy a house or a car without doing some comparison shopping. The same holds true for condo hotels. Find out what you get for your dollar by pricing a variety of properties. Keep in mind that at most properties, price is non-negotiable, and that goes for whether you are working directly with the developer or using a real estate agent to assist with the transaction. (All realtor fees are already built into the price regardless of whether a realtor is involved or not.)
6. Read the fine print.
Not all condo hotel contracts are the same. You’ll want a real estate lawyer or broker familiar with condo hotels to review the contract, especially if you are a foreign buyer. With the help of a professional, you can be confident that the agreement is in your best interest.
7. Explore financing options.
Lenders will finance condo hotels. Shop around to get the best deal. Different terms and rates are available. Consider traditional banks and mortgage companies, but don’t forget to ask the developer or seller if he’s offering any financing options. A knowledgeable broker may also be able to make you aware of special lending programs available to condo hotel buyers.
8. Move quickly.
Sure you want to make an educated decision, but don’t spend so much time trying to make up your mind that you miss an opportunity. There is a limited inventory of condo hotels, and sales are taking place every day. If you are serious about owning one, the best time to act is now!