Is the Condo-Hotel Market Making a Comeback?

Condos

Those looking for the perks of homeownership with the amenities of a hotel may find their perfect investment in what’s known as a condo-hotel property.

What is a condo-hotel?

A condo-hotel is a housing establishment that offers buyers the chance to purchase a unit in a community that offers a multitude of features that one would normally have to go to a luxury hotel to enjoy. These amenities can include anything from movie rentals to on-site spa services to room service and more.

A recent story from Bloomberg.com featured a buyer named Rainer Viete, who travels from Venezuela to Florida about once a month and found his ideal home away from home in the soon-to-be-built Hyde Resort & Residences in Miami. Viete was quoted as saying, “I love the amenities the building will have – a restaurant that can provide room service, a concierge, maintenance, a person that can clean your place, valet parking.”

The Hyde Resort & Residences is a $250 million project that is scheduled to break ground in August. According to Bloomberg, the community is already 85 percent sold.

A Growing Trend?

The Hyde Resort & Residences represents just one of many more such projects that developers are putting into the works. While the condo-hotel concept collapsed with the 2008 real estate crisis, developers across the United States are beginning to see a revived interest in the unique, amenity-driven real estate option.

In addition to Miami, other major U.S. real estate markets such as New York and Los Angeles are jumping on the condo-hotel bandwagon. According to some industry professionals, the combination of a rising demand for luxury homes and the rebounding hospitality market makes for the perfect economic conditions for the condo-hotel niche.

“One plus one makes three,” said hotelier Ian Schrager, who is developing Miami Beach’s Edition, a luxury lodging-and-residential tower with Marriott International Inc. Schrager is also working on a similar project on Manhattan’s Lower East Side with Witkoff Group.

“When you add condos to a hotel, the sum of the parts is more than the value of each individual component alone,” Schrager told Bloomberg. “They complement each other.”

Name Brands Attract Buyers

Another aspect that seems to be attracting wealthy buyers is the fact that most condo-hotels are operated under well-known brand names.

“No matter how wealthy you are, you are always considering where to park your cash,” said Steve Nagelberg in a telephone interview with Bloomberg. “But when I saw the Ritz-Carlton name, I thought, you can depend on this. I knew this type of company would be here not just a year from now, but 20 years from now.”

Nagelberg is a 60 year old orthopedic surgeon who bought a home in the Ritz-Carlton Residences in downtown Los Angeles. He and his wife purchased the 4,100-square foot three-bedroom unit in 2012.

Expense

As you might imagine, these types of homes aren’t cheap. Depending on location, amenities and size, a unit in a condo-hotel could range anywhere from $200,000 (pre-construction) to more than $1 million.

Despite the expense, condo-hotel units can provide the opportunity to make money. In condo-hotels, many owners do not reside in their units full-time, allowing the hotel to rent out the units when they’re not in use and provide revenue for the residents, similar to a time share. This can be a fairly lucrative investment for the savvy buyer, but like any financial endeavor, it doesn’t come without a certain level of risk.

Wealthy or not, potential buyers in the condo-hotel market should take the time to investigate the property, the management company, and consult a financial advisor for details – especially if this is their first experience with purchasing in a condo-hotel, time share or similar real estate transaction.

Condo Lenders

Most residential mortgage lenders offer financing for condominiums. However, condo financing is not always as easy as it is for stand alone properties. There are additional considerations lenders take into account such as the number of units used as rentals, the number of floors in the property, adequate insurance coverage, whether the HOA is managed and dues are current, and other contributing factors. Conducting a simple online search for condo financing, we found relatively well know companies such as Wells Fargo, eLEND, and American Bank. When speaking with a mortgage company, we sure to come prepared with some details on the property and provide the lender/s with the contact information for the HOA. The lender will require a representative to complete a condo questionnaire which will help them determine whether the property fits within their product guidelines. You’ll will be thanking yourself for taking care of this step at the on-set of the process rather than out 2 days before closing that they cannot help you.

Quick Trip to San Diego, California

San Diego, CASan Diego is California’s answer to the oft-asked question: “What’s a typical SoCal destination that’s not just another trendy, pricey beach town?” Founded in 1769, “America’s Finest City”, combines the heart and soul of an established city with its Mexican-American heritage, Coronado’s military influence, and the surf culture. This easy blend of features set against an upscale, high-rise skyline is maybe why San Diego is a favorite getaway choice.

Explore Vacation Rentals in San Diego, CA.

Since 1915, visitors have been able to ease into San Diego’s historic downtown by way of train. The Santa Fe Depot is worth a visit, regardless of your mode of transportation. It is a stunning example of Spanish Revival architecture and is festooned with lovely fountains, mosaics, and palm trees. The depot’s former baggage handling building is now home to the Museum of Contemporary Art and has an ever-changing calendar of events and exhibits.

Head north a bit to take in the sights along the San Diego bay. It’s the ideal spot to see downtown from a distance, the Maritime Museum’s tall ships, and maybe take a ride on the famous old wooden roller coaster in Mission Bay. While here, you’ll no doubt be enticed by some of the waterfront restaurants and pubs. San Diego’s culinary offerings are unique and not to be missed! Be on the lookout for pork carnitas, fish tacos, craft beers, Mexican chocolate, and frozen temptations such as salted caramel or mango chile popsicles.

While exploring the coastal side of town, a scenic drive by the Sunset Cliffs to the Cabrillo National Monument is well worth it. Nature lovers enjoy the 2-mile trek along Bayside Trail. It’s close to where in 1542; Juan Rodriguez led the first European expedition to explore the area. Farther up the coast around La Jolla, are some favorite surf spots and the 2000-acre Torrey Pines State National Reserve. The nearby lagoon area, framed by majestic sandstone cliffs is an awesome place to picnic and bird watch. (While in San Diego, be sure and make plans to visit a few of its 15 museums and outstanding zoos.)

It is definitely worth your time to venture inland, towards the westerly areas of San Diego. The Mission Basilica was founded in 1769 and was the first mission in the state. Today it is still an active parish and an excellent place to buy Mexican folk art and pottery.

Of course the only real way to get to know a place is with an extended visit. At Masterpiece Rentals, we have a number of choice accommodations in the San Diego area.

Find a San Diego Vacation Rental.

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