Condotel hell
By Glenn Roberts Jr., Thursday, April 10, 2008.The Wall Street Journal reports that the condo hotel, also known as "condotel," "may go down as the Pets.com of the real-estate bubble." Unfortunately, the condotel industry does not have a snappy sock-puppet mascot.
What are condotels? They are a sort of hotel-condo hybrid. The rooms can be rented out for short-term use, like a hotel room, and typically cost more than a condo unit to purchase.
Owners of the units can share in the rental income of the unit, though rental profits for the owner are not guaranteed and there are other expenses associated with the properties, including insurance and maintenance and mortgage costs.
The article, which refers to condo hotels as among "the most dangerous investments" during the real estate boom, cites examples of buyers of the condotel units suing developers to get out of contracts, "claiming they were misled." A group of condotel owners are using their own operator at the Trump International Hotel & Tower in Las Vegas because they say Trump's room rate was too high.
Some buyers have taken their complaints to the U.S. Securities and Exchange Commission, charging that the units were sold as unregistered securities and purchased as investments -- if buyers can prove that the units should have been marketed as securities and required detailed investment information, they may be able to recoup costs.
Inman News earlier reported that there are typically more restrictions on usage, decorating and storage associated with condotel units than with standard condo units.
The condotel industry has its own trade association, dubbed NACHO.
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Submitted by Kaye Thomas on April 10, 2008 - 6:43pm.
There is one in Hermosa Beach Ca that is making all the owners very happy with their investments. I suspect this is another case of location, location, location.
Submitted by Real Estate Data Junkie on April 12, 2008 - 7:46am.
Don't believe the hype. As a former market analyst having covered 10+ condo hotel projects over the last 5 years across western north america, I can tell you 100% of them were never marketed as an investment. Nor did any of the biggest competitors because everyone knows everyone in this small niche market. This article was almost completely focused on one project, lame. People speculate on anything these days regardless. The wsj writer and Ernst & Young source are completely miss informed about what is going on in the condo-hotel industry. Not to mention, anyone can find the real estate data sources (for free, practically anywhere on the internet) regarding any need for occupancy focasting etc to make more informed decisions.
Suggestion for good sources:
N.A.C.H.O.
Smith Travel Research
RCLCO
Totally bogus article
Submitted by Sal Antsipenka on April 13, 2008 - 8:53am.
Condotels are very popular with foreign investors and I receive more and more requests for funding. However it's very difficult with institutional lenders and we primarily work either with US based private lenders ot European banks and private lenders. A lot of foreign investors want to rent out their investment properties either long term or short term.
Details at http://www.moneybrokering.net
Submitted by Joe Cline on April 15, 2008 - 3:35pm.
I'm guessing that these would do great in Austin Texas. We love TexMex so NACHOs would probably be gobbled up here. :)
Joe
Lakeway Texas Real Estate and MLS Search | Davenport Ranch Texas Real Estate
Submitted by oliva barnand on May 11, 2009 - 4:19am.
First time heard about Condotel that condo hotel also known as "condotel". Real estate Florida Real estate Tampa bay