Condo Hotels - what's the catch?

[Yadira Gutierrez]

Hello BP Community,

I have been presented with an opportunity to invest in a Condo Hotel.

It seems too good to be true...

Are you the owner or are you buying the right to rent it out only?

Anybody can shed some light?

Thanks bunches!

Yadira

[Seiichi Ishikawa]

Generally, you are the owner, but it is managed and rented out at a nightly rate, like a hotel. You can use it any time you want.
Financing is generally challenging, as it's not a typical single family home deal.
Usually the nightly rate is split 50/50 with the management company. Ask about association dues and cleaning fees as well as their policy on "rotation". There will obviously be some units that are preferred and asked for specifically, but the management will usually have a method to try to "spread out the wealth" in terms of all the units having a fair chance at getting rented.
Check to see if you can have an outside company manage the rental or if you can use an outside cleaning crew. (Just in case you don't like the management co that comes with the purchase).
Lastly, ask the seller for the actual rental records for the last year, to really get an idea of how much you might earn.