A condo hotel, also known as a condotel, hotel condo, or a contel, is a building that is legally a condominium but operated as a hotel, offering short-term rentals, and which maintains a front desk.
Condo hotels are typically high-rise buildings developed and operated as luxury hotels, usually in major cities and resorts.[1] These hotels have condominium units that allow someone to own a full-service vacation home. When they are not using this home, they can leverage the marketing and management done by the hotel chain to rent and manage the condo unit as it would any other hotel room.
Legal conflicts
The U.S. Government is very strict about the type of advertising that can be done vis-a-vis condo hotel projects. Some condo projects have advertised themselves as real estate investments, but since the value of these condos as a real estate investment is not entirely clear the U.S. Government currently disallows use of this reference when advertising condo hotels.[citation needed]
Condo hotels have been criticized in California for allowing developers to skirt laws designed to protect public access to beaches. Because such a facility has hotel rooms, it can be classified as a public accommodation, even though the majority of the units are privately held, and the facility does little to accommodate the public.[2]
In the Philippines condominium hotels carry a condominium real estate deed. This allows foreigners to acquire up to 30% of the condotel units, unlike most other real estate.[3] This has made this particular development popular in the country.
Note that analyzing the economics of a condo hotel unit is extremely difficult because of the challenge of getting accurate information about the potential income stream. Developers uniformly do not provide important data or estimates for room rates or occupancy levels for fear of coming under U.S. Securities and Exchange Commission (SEC) regulations on investments, as opposed to real estate regulations.[5]
Financial considerations
The primary factors that contribute to the financial outcome in ownership are rental revenue, appreciation or depreciation, lending and tax deductions.[citation needed]
Rental revenue is shared with the management company, and owners typically pay no upfront fees for management, which includes the marketing and reservation of the units.[citation needed] Typical monthly fees for units in the rental pool include FF&E (Furniture, Fixtures and Equipment) reserve and resort fee(s). Although the revenue splits between owner and management company do vary from project to project, most hover around 50 percent. Most condo hotels, and especially branded hotels like Westin or Ritz-Carlton, are strategically located in resort economies or popular urban destinations, which allow for high nightly rates and consistent year-round occupancy. Rental income from hotel guests is at the mercy of travel patterns and may decline.
Many condo hotels, especially the branded condo hotels, have seen double-digit growth, and have out-performed traditional condos or single family homes in the same resort market. Condo hotels units are fee simple deeded real estate, and can be bought and sold like other forms of real estate. Because of the lack of resale data available for many of the emerging markets where pre-construction condo hotels can be found, experts heed caution when considering a condo hotel purchase for investment purposes alone.[6] Just like traditional real estate, appreciation is never guaranteed. This very scenario most recently occurred in Las Vegas. Several of the more notable condo hotels have sold for less in the resale market than during pre-construction.
Financing is generally costlier than for a primary residence.[citation needed] Mortgage rates may be a full point higher, and in the past this was especially true because financial institutions were unfamiliar with the condo hotel concept. Pre-construction purchases require a significant down payment, and buyers will not see financial return or be able to use their unit until the hotel is completed and ready for operation. Furthermore, owners may have to purchase extra insurance to protect against liability claims and some types of damage or loss.
Additional tax benefits may be obtained through condo hotel ownership.[citation needed] If the condo hotel is used for non-primary residence or residential rental, owners may be able to accelerate the depreciation on their condo hotel unit from 39 years, down to 27.5, 15, 7, and even 5 years. Condo hotel tax laws determine this, and affect individuals on a case-by-case basis, as each potential buyer's tax situation is different.
Homeowners' association fees and services
As with most condominiums, owners of condo-hotel units are required to pay homeowners' association fees, commonly referred to as HOAs. The fee and services can vary a great deal. Factors causing a fluctuation are the hotel's star rating and operation level, and its physical location. A property located on the ocean, for example, can experience coastal weather on a regular basis, which in turn can increase the need for more regular maintenance to the exterior of the building. Along those same lines, a property located in a ski resort must weather powerful winter storms and must also deal with snow removal services.
Exceptions aside, many of the fees and services found in HOAs are fixed and fluctuate very little from project to project. Services such as these usually include general unit utilities, common area utilities, individual room and building reserves, grounds maintenance, exercise area use fees, security, pest control, mechanical repair costs, safety alarm systems, parking area maintenance, pool area maintenance, and owner management and administrative services. Items related to hotel guest impact are generally not included in the HOA fees; these include housekeeping, and costs related to hotel staffing and operation.[7]
This aims to be a complete list of the articles on real estate.
A homeowner association [or homeowners' association (HOA), sometimes referred to as a property owners' association (POA), common interest development (CID), or homeowner community], is a private, legally-incorporated organization that governs a housing community, collects dues, and sets rules for its residents. HOAs are found principally in the United States, Canada, the Philippines, as well as some other countries. They are formed either ipso jure, or by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision.The developer may transfer control of an HOA after selling a predetermined number of lots.
Renting, also known as hiring or letting, is an agreement where a payment is made for the use of a good, service or property owned by another over a fixed period of time. To maintain such an agreement, a rental agreement is signed to establish the roles and expectations of both the tenant and landlord. There are many different types of leases. The type and terms of a lease are decided by the landlord and agreed upon by the renting tenant.
A condominium is an ownership regime in which a building is divided into multiple units that are either each separately owned, or owned in common with exclusive rights of occupation by individual owners. These individual units are surrounded by common areas that are jointly owned and managed by the owners of the units. The term can be applied to the building or complex itself, and is sometimes applied to individual units. The term "condominium" is mostly used in the US and Canada, but similar arrangements are used in many other countries under different names.
A housing cooperative, or housing co-op, is a legal entity which owns real estate consisting of one or more residential buildings. The entity is usually a cooperative or a corporation and constitutes a form of housing tenure. Typically housing cooperatives are owned by shareholders but in some cases they can be owned by a non-profit organization. They are a distinctive form of home ownership that have many characteristics that differ from other residential arrangements such as single family home ownership, condominiums and renting.
A timeshare is a property with a divided form of ownership or use rights. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each owner of the same accommodation is allotted their period of time. Units may be sold as a partial ownership, lease, or "right to use", in which case the latter holds no claim to ownership of the property. The ownership of timeshare programs is varied, and has been changing over the decades.
Property management is the operation, control, maintenance, and oversight of real estate and physical property. This can include residential, commercial, and land real estate. Management indicates the need for real estate to be cared for and monitored, with accountability for and attention to its useful life and condition. This is much akin to the role of management in any business.
A vacation rental is the renting out of a furnished apartment, house, or professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel. The term vacation rental is mainly used in the US. Other terms used are self-catering rental, holiday home, holiday let, cottage holiday and gite.
Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reasons, but typically there is some amount of personal access involved. One of the main motivators for a fractional purchase is the ability to share the costs of maintaining an asset that will not be used full-time by one owner.
In the leisure industry, a destination club is a form of timeshare system where members pay a membership deposit and annual dues to access the club's properties.
Commercial property, also called commercial real estate, investment property or income property, is real estate intended to generate a profit, either from capital gains or rental income. Commercial property includes office buildings, medical centers, hotels, malls, retail stores, multifamily housing buildings, farm land, warehouses, and garages. In many U.S. states, residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes.
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. In contrast, real estate development is building, improving or renovating real estate.
In real estate, a condominium conversion or condo conversion is the process of entitling an income property or other lands currently held under one title to convert from sole ownership of the entire property into individually sold units as condominiums. Such entitlement is generally derived from approvals granted by state/provincial and/or local municipal authorities.
Leaseback, short for "sale-and-leaseback", is a financial transaction in which one sells an asset and leases it back for the long term; therefore, one continues to be able to use the asset but no longer owns it. The transaction is generally done for fixed assets, notably real estate, as well as for durable and capital goods such as airplanes and trains. The concept can also be applied by national governments to territorial assets; prior to the Falklands War, the government of the United Kingdom proposed a leaseback arrangement whereby the Falklands Islands would be transferred to Argentina, with a 99-year leaseback period, and a similar arrangement, also for 99 years, had been in place prior to the handover of Hong Kong to mainland China. Leaseback arrangements are usually employed because they confer financing, accounting or taxation benefits.
A dockominium is the water-based version of a condominium; rather than owning an apartment in a building, one owns a boat slip on the water. The term is a portmanteau of "dock" and "condominium." In addition to the exclusive right to use the boat slip, ownership also provides one with the right to use the common elements of the marina, much the same as one would have the right to use the common areas in a residential condominium development. Also, unit owners may use, rent, or sell their unit at any time, subject to association approval.
A reserve study is a long-term capital budget planning tool which identifies the current status of the reserve fund and a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major common area expenditures actually occur. The reserve study consists of two parts: the physical analysis and the financial analysis. This document is best prepared by an outside independent consultant for the benefit of administrators of a property with multiple owners, such as a condominium association or homeowners' association (HOA), strata, containing an assessment of the state of the commonly owned property components as determined by the particular association's covenants, conditions, and restrictions (CC&Rs) and bylaws. Reserve studies however are not limited only to condominiums and can be created for any "common interest community" (CIC) properties such as resort properties, community/neighborhood associations, coops, etc.
Strata management, sometimes known as "body corporate management", is a specialist area of property management involving the day-to-day operation and management of a property that is jointly owned and comprises multiple units, common areas and common facilities. It is derived from an Australian concept of property law called strata title applied to the administration of common ownership in apartment buildings on multiple levels, or strata. Emerging markets in Dubai, Abu Dhabi, the Philippines and India have adopted the Australian system. It is one of the fastest growing forms of housing in the United States today, similar to common-interest development (CID), a category that includes planned unit developments of single-family homes, known as homeowner associations (HOAs), condominiums, and cooperative apartments.
The Republic of Panama's real estate industry relies on foreign investment. The sector has grown since 2006, as such investment has helped to fuel Panama's economy and housing market.
One in eight Canadian households lived in a residential condominium dwellings, mostly located in a few census metropolitan areas according to Statistics Canada Condominiums exist throughout Canada, although condominiums are most frequently found in the larger cities. "Condominium" is a legal term used in most provinces of Canada. in British Columbia, it is referred to as "strata title" and in Quebec, the term "divided co-property" is used, although the colloquial name remains "condominium".
The Platinum is a 17-story, 255-unit condo hotel located at 211 East Flamingo Road in Paradise, Nevada, east of the Las Vegas Strip. The project was approved in 2003, and began construction in 2005, as a joint venture between Diversified Real Estate Concepts, Inc. and Marcus Hotels and Resorts. The project was topped out in December 2005, and was opened in October 2006. In 2009, buyers filed lawsuits against Marcus for various allegations; the last of the lawsuits were settled in March 2013.
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