Frequently Asked Questions

Condo hotels are not a new concept. They in fact have been around since the seventies when primarily only savvy investors and corporate giants controlled the purchasing power of this well kept secret. Famous developers like Donald Trump and corporations like Marriot, Hilton, and even Exxon Corp were involved in this segment of the real estate industry. Today because of its popularity and enormous growth; more investors than any other segment other than primary home ownership now enjoy it. Here are the most often asked questions and answers.

1. What Is A Condo Hotel?

Condo hotels are resort properties that sell condo usage to individual investors who use the condos for vacation purposes. When they're not using them, the condos are placed into an organized rental program. Rental proceeds, which are shared with the operator, helps defray the operational expenses.

2. When Should I Buy A Condo Hotel?

The best time to purchase a condo hotel unit is in pre-construction. Pricing is usually at the lowest at this point of development; buyers can achieve greater rental revenue profits during their ownership and realize greater profits for resale due to appreciation. It is most beneficial for condo hotel buyers when a management company provides an equal share of the total rental revenue of the entire property to its owners, rather than rental revenue from a specific unit. This prevents buyers that may purchase a unit in the later stages of a project to not have their consistent profit potential effected by their unit not being located in the most desirable areas of a particular project.

Most condo hotels go through several price increases. Most do sell out before construction is complete and in some cases, condo hotels sell out before construction is even begun.

3. What Makes A Condo Hotel A Good Purchase For Me?

Buyers have a vacation home in a premier location for their personal use. Owners, when not using the condo hotel property, receive rental proceeds which helps defray the expenses of ownership.

Condo hotels have amenities and services that enhance their appeal to potential buyers as well as future renters. Typical amenities are pools and fitness centers, tennis, restaurants, business centers and more. Services could include valet, concierge and housekeeping.

The on-site management company handles the day to day operation, maintenance and runs the hotel rental desk. Condo hotel owners have the right to resell their unit at any time. They keep any profits derived from appreciation. Condo hotels combine vacation home ownership with investment potential through rental income and appreciative value.

4. Benefits Of On-Site Management To The Buyer?

The on-site management company, in exchange for a share of the proceeds from the hotel operation, advertises the property as a hotel, operates the front desk, maintains the property and provides the hotel with housekeeping, food and beverage, and concierge.

Some of the items in the management agreement include:

· The percentage split of the rental proceeds between the condo hotel owner and the management company.

· Expenses before each of the parties receives their share, including operating expenses and future reserves.

· Who pays for real estate taxes, insurance, and capital improvements? The individual condo-hotel owner usually pays these. However! At Costa Baja Condo Hotel all these fees are paid before any rental split therefore becoming a true 50/50 split between the unit owner and operator.

· Who pays for operating expenses such as housekeeping, front office, administrative and general, and marketing? These expenses are paid from the gross rental revenue before any rental split between the operator and the owners. Travel agent and credit card commissions are usually split between the condo hotel owner and the operator.

· A “Rules and Regulations” document that outlines the frequency and notice requirements of owners when they wish to use the condo hotel property.

5. As A Prospective Buyer: What Should I Look For In A Property?

The ingredients to a successful condo hotel property are a prime location, an appreciating real estate market, an appealing amenity package, a experienced developer, a recognized franchise and whether or not the developer is long term vested in the property management. Developers that have a long-term interest tend to place more attention on the operations side for the future, which enhances the value potential.

6. Where Can I Find A Condo Hotel Property?

Condo hotels are typically found near the ocean, theme parks, cruise ship ports, golf courses, or in major cities. South Florida, Las Vegas, Orlando, Southern California are areas popular for condo hotels, and for a few years had the most condo hotel inventory in the nation. Also popular are condo hotels in cities like Boston, Chicago, New York and Toronto. Outside the U.S., condo hotels can be found in Mexico, Central America, and the Caribbean. These international properties usually have greater profit margins due to lower sale prices as a result of less expensive land and construction cost without sacrificing quality. Look for locations with high tourist traffic and easy accessibility for greater resale potential and higher appreciative values.

7. What Type Of Construction Should I Look For In A Condo Hotel?

Some condo hotels are newly built from the ground up. There also are properties that were originally hotels and have been upgraded and converted into condo hotels. Because land in prime locations is so limited and costly, it is likely that condo hotel conversions will soon outpace new construction of condo hotels. Some of the more popular destinations simply do not have any vacate properties available therefore limiting new construction. Existing structures are sometimes a better value for developers and buyers as well.

8. What Will I Have To Pay For Condo Hotel Ownership?

Just like residential home prices can range from hundreds of thousands to many millions, so do condo hotel units. The answer, of course, depends on which house, in which neighborhood, or which condo hotel property. Factors that can influence price are the property's location, the quality of the amenities and the brand name. Generally speaking, across the entire spectrum of condo hotels, prices can range from $100,000 - $1,500,000.

9. Who Is Buying?

Buyers come from all over the world to North and Central America because of the appreciation rates and profit potential of our real estate markets. Many buyers find U.S., Caribbean, and Latin American property extremely appealing. They like the idea of owning a vacation home in a prime location that can earn rental income when they're not using it and are likely to quickly appreciate in value.

10. Can I Finance My Condo Hotel Purchase?

Yes. Most lenders are familiar with condo hotels and recognize them as a desirable real estate investment. As for properties outside your home country it is best to take advantage of in-house financing when available or take out a second mortgage on an existing asset.

11. Where Can I Find Out More About Available Condo Hotel Properties?

Visit www.costabajacondohotel.com for a list of suite and property amenities for our current property NOW SELLING in Ensenada, Mexico. Click on contact us to send and e-mail and request additional information or reach us by phone at 702.968.2962 9am-6pm PST.

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