Investing in Condotel in St. Pete FL

[Skip Saldan]

We have a "condotel" on St Pete Beach in Florida. If you haven't heard of the condotel model, you'll want to look it up. Ours is at the Tradewinds resort in the Jacaranda building. We net between $45-50k per year and do zero for it. No cleaning, no calls, nothing. Our LLC bought it 5 years ago, and could be convinced to sell off a percentage. Oh, by the way, each 25% includes a free 7 night vacation at the resort (or broken up nightly) with all on site amenities included. Gulf front, 6th floor (so your views are over the tops of the palm trees) master bedroom with a king to sleep and an ensuite, two other queens, another bath and full kitchen.

You might consider this a hybrid investment with vacation benefits. This is not a time share in any way. Our LLC is on the deed and they sell like regular real estate.

Any thoughts?

Cheers

[Tim Schroeder]

Setting aside the potential for improved ROI for a moment, here's how the (over-simplified) numbers look to me personally.

If I were to buy 50% outright, that would be 22k net income / 340k purchase = 6.5% CoC ROI. I could get that in a stock market index fund with a whole lot less hassle and risk.

If I were to mortgage it (assuming I even could, what with the fractional ownership) it would be 340k purchase with 20% down @ 5.5% = 68k down pmt and 1823/mo (22k/yr) in mortgage costs. That brings my ROI down to exactly zero. (half of 44k income is 22k, less the 22k mortgage = zero)

I admit this is oversimplified, but I think I'm in the ballpark, right?

If I were you, I'd keep enjoying that income and manage it yourself - thus increasing it. Or sell it and take that 679k and leverage it by buying 5-10 other properties (with mortgages) that have better ROI's