How is owning a condo hotel different than owning a traditional condo?
A condo hotel is designed to be sold off in units as condos but to be operated as a hotel. You own your unit 365 days a year, but owning it and using it are not the same thing.
The concept behind a condo hotel is that most people who can afford a second or third home want to add real estate to their portfolio, enjoy it a few weeks or months a year, and then go back to their primary residence.
The problem with that kind of second home ownership is that if your condo remains empty 11 months of the year, you still own it, and still have to pay your real estate taxes, homeowner’s association fees, insurance and mortgage debt service, as if you were using it all the time. Also, you have to maintain it. That is, nobody is there to let you know if your pipe bursts, a fire occurs or your A/C breaks. Do you want to deal with those types of problems long distance or when you arrive for your next vacation?
The condo hotel provides you with the ability to use your unit when you want but gives you the freedom and the benefit of being able to place your unit into the rental program where it will be maintained, cleaned and rented out by the hotel’s on-site management in your absence.
In return, you will receive a portion of the revenue that is generated from the rental of your unit, which will help offset your ownership costs.
Now, if you wanted a place that you could live in 365 days a year, as opposed to using as a vacation home, or if you’d rather not have your vacation home occupied by guests when you’re not there, then you'd want to purchase a traditional condominium, not a condo hotel.
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.