Monday, June 26, 2006
Sunday, June 18, 2006
What’s the Deal with Hotel/Condo’s Anyway?
The new hybrid housing phenomenon is hitting Chicago hard! Currently with 10 projects going up containing around 2,274 units you will soon be seeing condo/hotels throughout the city. This concept is better known in places like Florida and New York but expanded when developers found obtaining loans for new hotel projects more difficult. So they began selling hotel condos as a means of building equity.
Basically, it’s the same game as owning a hi-rise condo. You have a deed to the property, you pay taxes and monthly assessments. However, when you are not in your residence you can place your home in a rental pool and generate income. At some hotels, limits are placed on the number of nights owners can use their condos and in others, condo owners can stay in their units an unlimited number of night’s per year.
As you can guess, 60% of the buyers of these new hotel condos are empty nesters from the surrounding suburbs using their condos as weekend homes. Another 20% are from out of state while the remaining 20% are business looking for corporate suites or companies that operate vacation clubs. The prices tend to be higher on a per-square foot basis but there is a lot of variety, ranging from a 350 square foot king room for $220,000 upwards to $9 million for the deluxe. Remember, these are already furnished hotel rooms-many come with plasma TV and MP3 hook up stations.
So, is this a good way to make money? Don’t count on it! Due to heavy regulations from the SEC, developers can’t provide formulas or even talk about a units investment potential. Based on the dynamic nature of the hotel industry it makes it almost impossible to guess monthly costs. In some hotels, owners will never see the income in the form of a check, rather in credits that go towards monthly assessments or using hotel amenities, like the spa, restaurant, etc..
Those who us their hotel condo as a vacation home might find that it’s a worthwhile investment when they factor in lifestyle benefits, tax benefits and the likely appreciation of the unit when it comes time to sell.
The question I get the most is- “What happens to my stuff when I want to rent out my condo” Well, the hotel has a staff that comes in and stores it all in lockers and will return all the belongings to their original positions, when you come back. But don’t forget, this is still a hotel so everything costs extra!!
Hope this helps increase dinner conversation!!
Nick
PS- If you know anyone looking to buy or sell please feel free to pass along my contact info!
The new hybrid housing phenomenon is hitting Chicago hard! Currently with 10 projects going up containing around 2,274 units you will soon be seeing condo/hotels throughout the city. This concept is better known in places like Florida and New York but expanded when developers found obtaining loans for new hotel projects more difficult. So they began selling hotel condos as a means of building equity.
Basically, it’s the same game as owning a hi-rise condo. You have a deed to the property, you pay taxes and monthly assessments. However, when you are not in your residence you can place your home in a rental pool and generate income. At some hotels, limits are placed on the number of nights owners can use their condos and in others, condo owners can stay in their units an unlimited number of night’s per year.
As you can guess, 60% of the buyers of these new hotel condos are empty nesters from the surrounding suburbs using their condos as weekend homes. Another 20% are from out of state while the remaining 20% are business looking for corporate suites or companies that operate vacation clubs. The prices tend to be higher on a per-square foot basis but there is a lot of variety, ranging from a 350 square foot king room for $220,000 upwards to $9 million for the deluxe. Remember, these are already furnished hotel rooms-many come with plasma TV and MP3 hook up stations.
So, is this a good way to make money? Don’t count on it! Due to heavy regulations from the SEC, developers can’t provide formulas or even talk about a units investment potential. Based on the dynamic nature of the hotel industry it makes it almost impossible to guess monthly costs. In some hotels, owners will never see the income in the form of a check, rather in credits that go towards monthly assessments or using hotel amenities, like the spa, restaurant, etc..
Those who us their hotel condo as a vacation home might find that it’s a worthwhile investment when they factor in lifestyle benefits, tax benefits and the likely appreciation of the unit when it comes time to sell.
The question I get the most is- “What happens to my stuff when I want to rent out my condo” Well, the hotel has a staff that comes in and stores it all in lockers and will return all the belongings to their original positions, when you come back. But don’t forget, this is still a hotel so everything costs extra!!
Hope this helps increase dinner conversation!!
Nick
PS- If you know anyone looking to buy or sell please feel free to pass along my contact info!
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