Discussions and debates over whether condo hotels and mixed apartment hotels are a good investment have reignited over the past few years. The idea is that, an operating hotel with staff, concierge and all the other amenities also have condo units that they sell to private buyers. The main advantage of such an arrangement is that if the property has been purchased from the hotel’s pool of units, the hotel manages and rents out the property.
Having someone else manage and maintain your condo is a great option. Here are some of the benefits of a condo-hotel suite or simply a condo in a combined hotel and residential strata building:
The benefits of buying such a hotel unit are pretty obvious. They have great amenities and attractive deals to attract guests. Housekeeping services are awesome. Apart from the general maintenance that makes these places look classic, they have all the luxuries that you could wish for such as fitness centers, world class spas, pool, valet parking, concierge and not to forget the fine dining. The hotels have a policy to let the owners use the unit for some amount of time in a year and the remaining time they rotate and rent it out.
Things could get tricky
There are however, certain circumstances under which such an arrangement could get tricky. The hotel does help you rent out your property, but be aware that the revenues are shared too! The general share is 50:50. You will also be charged a monthly maintenance fee.
On the other hand, you can leverage from the hotel’s management expertise, reputation, advertising and affiliates. It’s an ideal situation to be in. This also has another side to it – your shared profits would also mean less ROI as the owner.
Some other factors to consider
Some of the other factors that affect your earnings from such an investment are that the rents are often lower than anticipated and are not steady due to certain other vulnerabilities such as bad weather, bad publicity, and market trends etc. that negatively impact and curtail tourism.
Understand that, if your strata unit is separate from the hotel, you can either live in it yourself or rent it out. You cannot however completely rely on the rental income. Rent from such properties is also rarely considered for mortgage eligibilities. This is mainly because, as mentioned earlier, they are influenced by a lot of external factors and are not steady all year round. Some financial institutions however can use this information to help you qualify for short term funds. However, rates and fees are quite different in this case.
Above all, if you are considering an investment of this type, it has its own advantages and disadvantages. While you enjoy the feeling of owning a classic luxurious property managed by a reputed hotel, you also must understand that this is ‘business’ and the hotel will definitely keep its share of the income. There will be maintenance fees and other charges too!
So think it through before you invest in this type of real estate!
Naz Allahyari, is a full-time Vancouver Real Estate Agent specializes in homes for sale in the North Vancouver, Yaletown, West Vancouver, Coal Harbour, and Downtown Vancouver.