Local Real Estate Networking
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Bad or good investment? Hard Rock Hotel Room San Diego...
I have no experience in this area ...
My first response is $300K seems a lot if all you are getting is 28 days of access. At $250/night (This is mostly a guess as to value of a VIP room) with 28 nights it would be 42.8 years to break even without accounting for inflation (today's dollars are worth more than tomorrow's dollars).
Do you get any of the return from the room being rented out on the days other than the 28 days? if you need to rent it for some of the 28 days are you in competition with the hotel for patrons? Would you want to stay there 28 days?
If all you are getting is access fore 28 days, that equates to ~1 month. Selling the room for the remaining months would yield 12 * $300K = $3.6M. I doubt the room is worth anywhere close to that value.
It seems to be time-share like. Time shares traditionally are a poor investment. Sometimes they are hard to just walk away from and trying to sell them is really tough.
From just the info presented, it seems to be a terrible investment but maybe some information is missing.
Good luck
. It sounds like a time share and you are footing the mortgage. If the building owner default does that mean you lost $300K. Got back from time share bought 10 years ago and we had to flee the free breakfast for upgrade. This is my brother in law's time share which he lost money and often forget to take vacation.
For that asking price I will buy a small cottage near the beach.
My buddy has had one since they were pre sales. He loves it. Part of it is financial returns on his $ (though that's not giant). He just digs the lifestyle. This is my buddy who used to go with me to Vegas all the time. We're too old for our VIP table service high end vegas clubbing days, but he can relive some with his HR condo.
My brother owns two properties here (San Diego Hard Rock). One unit on the second floor and one on the third floor. He bought the first unit back when they first announced they were selling, maybe over ten years ago. Then the second unit he bought within the last few years. He's now planning on purchasing a suite (like Black Eyed Peas) but the return might not be as great the last time we looked at numbers.
He obviously enjoys owning since he went and purchased another one years later, and is now looking into a third unit.
I'll give you some rough numbers on the smaller unit. According to memory, He bought the first unit in about 2008 or so, it was a lot cheaper then (obviously). I think he paid a little over $200,000, IF that. Hard Rock takes almost half the income (acting as property manager) and we do get 28 free days a year (hardly used). Since then I believe his cut of monthly owners draws have roughly been $2000 on a bad month and over $3000 on a good month. Keep in mind these numbers are rough and based on my memory of the few owners draw statements I've seen a few times and it's really a basic quite, two queen beds. Nice bathrooms. The nightly room rate fluctuates between $150 to $275, depending on the seasons. I think his room is no
I have no idea what his other unit is getting on the third floor, I've never seen it. We always stay on the second floor if we do take the room a few times a year. We both live within blocks of the hotel so its easy to just pop in any time. Ok so that info is irrelevant but anyways... Nice small investment in MY opinion.
I actually do accounting for a few other properties around San Diego and so far, my brothers units appear to be the least stressful to own with a nice little easy income every month.
@Rome Gal, there was a 500 owner class action law suit against the developer of the HR hotel years ago for alleged misuse of association funds. I’m sure you can google it to see if it was settled.
It's basically a time-share. I've looked at it in the past and I am confident I can find other opportunities with a better ROI than the HR model.
Want to stay at HR? Book a room, it’s cheaper than investing, my two cents.
@Rome Gal, btw La Costa Resort and Carlsbad Village Inn both sell the same business model as the Hard Rock Hotel in downtown SD. In case this is of interest to you and you want to compare similar models. I’ve reviewed all three and again, it’s not for me.
This is great insight, thanks for sharing. If he was indeed getting $2,000 - $3,000 a month on a $200k investment, then that's fantastic! That's a 12-18% return with zero work, plus the benefit of the perks of ownership and 28 days of free room stays. That's amazing.
Any updates on this Miranda or anyone else with insights? This sounds like an incredible investment and I would love to have the perks. I've been thinking about doing this in Sri Lanka or Thailand as well with similar deals.
Originally posted by @Account Closed:My brother owns two properties here (San Diego Hard Rock). One unit on the second floor and one on the third floor. He bought the first unit back when they first announced they were selling, maybe over ten years ago. Then the second unit he bought within the last few years. He's now planning on purchasing a suite (like Black Eyed Peas) but the return might not be as great the last time we looked at numbers.
He obviously enjoys owning since he went and purchased another one years later, and is now looking into a third unit.
I'll give you some rough numbers on the smaller unit. According to memory, He bought the first unit in about 2008 or so, it was a lot cheaper then (obviously). I think he paid a little over $200,000, IF that. Hard Rock takes almost half the income (acting as property manager) and we do get 28 free days a year (hardly used). Since then I believe his cut of monthly owners draws have roughly been $2000 on a bad month and over $3000 on a good month. Keep in mind these numbers are rough and based on my memory of the few owners draw statements I've seen a few times and it's really a basic quite, two queen beds. Nice bathrooms. The nightly room rate fluctuates between $150 to $275, depending on the seasons. I think his room is no
I have no idea what his other unit is getting on the third floor, I've never seen it. We always stay on the second floor if we do take the room a few times a year. We both live within blocks of the hotel so its easy to just pop in any time. Ok so that info is irrelevant but anyways... Nice small investment in MY opinion.
I actually do accounting for a few other properties around San Diego and so far, my brothers units appear to be the least stressful to own with a nice little easy income every month.
Hey Cody, and idea of what his financial returns were on this? I love the perks and if it's anything higher than 4=5% returns, this sounds perfect including the 28 free stays.
Originally posted by @Cody L.:My buddy has had one since they were pre sales. He loves it. Part of it is financial returns on his $ (though that's not giant). He just digs the lifestyle. This is my buddy who used to go with me to Vegas all the time. We're too old for our VIP table service high end vegas clubbing days, but he can relive some with his HR condo.
Quote from @Cody L.:
My buddy has had one since they were pre sales. He loves it. Part of it is financial returns on his $ (though that's not giant). He just digs the lifestyle. This is my buddy who used to go with me to Vegas all the time. We're too old for our VIP table service high end vegas clubbing days, but he can relive some with his HR condo.
I’m about to check one of these out today. I’m curious about exit strategy and what kind of ownership rights do I have. Can I get in touch with your friend to find out more about his experience?
Quote from @Account Closed:
My brother owns two properties here (San Diego Hard Rock). One unit on the second floor and one on the third floor. He bought the first unit back when they first announced they were selling, maybe over ten years ago. Then the second unit he bought within the last few years. He's now planning on purchasing a suite (like Black Eyed Peas) but the return might not be as great the last time we looked at numbers.
He obviously enjoys owning since he went and purchased another one years later, and is now looking into a third unit.
I'll give you some rough numbers on the smaller unit. According to memory, He bought the first unit in about 2008 or so, it was a lot cheaper then (obviously). I think he paid a little over $200,000, IF that. Hard Rock takes almost half the income (acting as property manager) and we do get 28 free days a year (hardly used). Since then I believe his cut of monthly owners draws have roughly been $2000 on a bad month and over $3000 on a good month. Keep in mind these numbers are rough and based on my memory of the few owners draw statements I've seen a few times and it's really a basic quite, two queen beds. Nice bathrooms. The nightly room rate fluctuates between $150 to $275, depending on the seasons. I think his room is no
I have no idea what his other unit is getting on the third floor, I've never seen it. We always stay on the second floor if we do take the room a few times a year. We both live within blocks of the hotel so its easy to just pop in any time. Ok so that info is irrelevant but anyways... Nice small investment in MY opinion.
I actually do accounting for a few other properties around San Diego and so far, my brothers units appear to be the least stressful to own with a nice little easy income every month.
I’m about to check one of these out today. I’m curious about exit strategy and what kind of ownership rights do I have. Can I get in touch with your brother to find out more about his experience?
Did you end up checking them out? Am also interested and wanting to learn more about it. thanks!
Quote from @Edwin Wong:Did you end up checking them out? Am also interested and wanting to learn more about it. thanks!
Lots of experts with misconceptions on these.
It's not a timeshare. You have the deed and hold title with complete ownership like a normal condo.
I saw 1099s between 28k-31k and 12k in expenses i.e. taxes and HOA. At 250k, that's 6.7 and 7.6% return blowing away most investments
Drawbacks is that the income is based on tourism which has been great for the last decade minus covid lockdowns.
Will the hotel be as popular if they stop leasing the name?
I always suggest investors to purchase at least 1 because it's designed for the investor from the get go. Maintenance free and automated. Hell if you like airbnb, then this should be right up your ally because it's a short term rental with a 70% occupancy rate without the hassle, bad reviews, host expenses etc. I wish they had more investor owned hotel options because it's also perfect for vacation since you can rent it any time you want. You can't do that with a long term tenant.
There are over 20 units for sale right now. Is there something wrong with this? A big levy coming down? If anyone has any insight as to why so many are selling if it's profitable.
Yes I have some insights. the HOA just went up from $714 to $770. On top of that, HRH is going to renovate all the units but that's all the information I have. This means the owners will have to pay for the renovation. The units have been out for almost 15 years now so this is normal. I spent $25k on renovating my house after renting it for 15 years so theirs nothing unsual here as far as real estate capital investments go.
Also, something I don't pretend to grasp is the fact that bonds are paying 5%, dividens more and the stock market in general is even better. So if a HRH unit can make 5-7% but with more risk than a 5% bond, then that's a bad deal unless you can benefit in other ways like using the unit yourself. I saved 8,400/year by staying in my unit for free for 3 weeks out of the year not including the free parking, drinks and discounts on the restuarants for being an owner. Even the Residents-in is $400/day in downtown. You can hit up a hostel for $80/day to save money if that's you but those are usually for crack heads.
All that being said, I purchased a unit in 2016 for 250k and it's barely worth that 10 years later. These things don't appreciate much but if the returns keep growing after the renovation, the prices may jump once again. The sales goes in waves. When supply is low, prices go up. Some units sold for over 300k months ago. Now they might hit 250k again. The cycle will happen again.
Thank you for this insight. With property taxes, insurance and all other costs is this profitable each month? What is the slowest month and busiest month?
Quote from @San Sal:
Thank you for this insight. With property taxes, insurance and all other costs is this profitable each month? What is the slowest month and busiest month?
Yea it's an average. Of course winter is slower, it follows the trends in tourism and prices match the near by hotels. I've been making over 7% CAP on one unit and over 6% on another at a purchase price of 250k. This beats the bond market by 2-3%. That's 19k and 14k cash in pocket after the 12k in HOA/Taxes and has been consistent for years. This cash should be reinvested into the S&P 500 or something with stronger returns since real estate has no compounding effect like stocks do. I think owning one unit is ok for diversification as it has all the tax benefits and short term rental benefits allowing you to stay for free any time you want along with other perks. I won't purchase another condo again after having owned these. A lot of condos in downtown don't allow Airbnb meaning you don't get the benefit of living in your unit when you need it and the cashflow is worse.
That being said, had I put 250k in the S&P 500 10 years ago, I would have $900,000 today. Compare that to some quick math on the Hard Rock and I would have a total of $460k which includes reinvesting the cashflow into the S&P 500. S&P 500 beats RE by double.
S&P 500 = $900,000
Real Estate = $460,000
However, these units are good for someone who wants to dip into real estate while using their unit any time they want with the aforementioned owner perks but without the hassle that ownership brings like maintenance, roof, bad tenants, furnishings, bill payments like SDG&E, internet etc. I haven't had a single issue or complaint at any of my units in 10 years. Their is a $1500 reserve that the HOA picks from when needed and I never had to replenish it as an automatic 5% of the rental income goes in per month and stops once toped off. Taxes are easier as well since all expenses are itemized for you in the monthly statement. These really make normal condos as investments obsolete and kind of ridiculous if you think about it.