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By David deForrest General Managerreal estate miami beach, miami beach real estate, realtor miami beach, miami beach realty, miami beach investment, miami beach propertydf.jpg (8763 bytes)

I am interested in a property described as a "Condotel" or Condo-Hotel. Can you give me an idea how these are operated and how they work as investments?

The following information is generic and may not be applicable to the particular property you are interested in, as some of these matters are treated differently in some projects. However, they are generally the norm for this sort of property. Be sure you review the Declaration of Condominium and By-Laws for the specific project you have in mind.

What is a condo-hotel? A condo-hotel offers the opportunity to own an elegant and exquisitely furnished hotel room in some of the most desirable locations in the world. Since this is a purchase, the buyer not only gets a deed to a property, allowing the sale or transfer of the unit, but also tax and real estate appreciation benefits. When using the unit, the owner has access to all of the amenities of the hotel. When not in use, the unit can be a available to rent through the hotel's rental program.

What are the major benefits to an owner of a condo-hotel unit? Most important is hassle-free ownership. When the unit owner, his family or friends want to use the unit, they call the hotel and schedule a visit. While at the hotel, they enjoy all of the amenities and services of the hotel. When the unit is not being used, it can be rented through the hotel's rental program, with no worry about maintenance and upkeep.

Who manages the hotel and what are their responsibilities? The hotel is managed by a brand-name hotel operator. This operator not only manages the hotel's rental program, but also markets the units, takes reservations, operates the front desk, maintains the property, and provides the services hotel guests expect, such as housekeeping, food and beverage, and concierge.

What general amenities does the hotel-condo have? Hotel-condos are designed as high-end resorts. Units owners will generally have access to valet, concierge, spa treatments, room service, maid service and world class restaurants.

What are the expenses of a condo-hotel? Aside from the real estate taxes, insurance and a mortgage payment (if there is one), there is a monthly assessment that covers maintenance of the unit and common areas, furniture replacement, utilities and a reserve fund.

Can family members and friends use the owners unit? Yes, with the permission of the owner.

Will a unit owner always be able to stay in their unit? Every attempt is made to make sure the unit owner stays in his room, but in high peak periods or on short notice the unit may be rented. If that is the case, the unit owner will be accommodated in another unit at a discount and personal belongings will be transferred to it.

Can a condo-hotel be financed? Yes it can. However, it may not be possible to finance it at the same rate and terms available for conforming residential property.

Can a Condo-Hotel be purchased under a corporation? Yes it can.

When can owners use their units? Each property varies, but generally it depends on the management agreement and location.

Is it mandatory for the unit owner to be in the hotels rental program? Sometimes yes, sometimes no. You must review the Declaration of Condominium to determine this.

How is the hotel rental program managed? The rental program is managed through a special reservation system that assigns "rotation points" to the units as they are occupied. This ensures that the units with the least amount of points are the next to be rented as long as they meet the guests' requirements.

How does an owner's stay in a personal guest room affect the rental program? When the unit is being occupied by the owner, his friends or family, the hotel's rental program does not assign any rotation points to it. Thus, you are encouraged to use your unit since the system will make up for the vacancy of the room upon your departure.

How is the revenue split between the unit owner and the hotel? Typically, the revenue is split 50-50 between the owners and management after expenses.

How often does the unit owner get paid? A quarterly financial statement detailing the unit's activity is issued, with accompanying payment, if due is typical but again, it depends on the management agreement and regulations of the particular project..

Can the unit owner get out of the rental program? Most hotel operators will let the unit owners leave the rental program with 60 day notice.

Does the owner receive a percentage of the revenues from the other facilities of the hotel? If the unit owner decides to participate in the hotel's rental program, he will receive a portion of the revenues from his unit. However, no other revenue from any of the hotel's services (i.e. restaurants, spas, shops) is issued.

Are there additional expenses that the unit owner incurs while staying at the hotel? The unit owner is responsible for any services used in the hotel such as meals, spa treatments and housekeeping. However, in many cases, there are special rates for all the services for owners.

Can unit owners furnish their own units? If the unit is placed in the hotel rental program, the owner must comply with the hotel's furniture selection. However, the owner is free to bring any personal items while their staying in their unit, which are taken with them when they leave.

How much does the hotel furniture package costs? It varies by hotel, but the initial costs are generally included in the initial purchase price.

Is the unit owner responsible for the furniture? Owners are responsible for their units and contents. They are required to buy the hotel's furniture replacement program, which enables a change of furniture every few years. If furniture is damaged while a guest is in the owner's unit, the hotel will bill the guest for the cost to replace the furniture.