The FloridaCondoInvestor.com network (www.FloridaCondoInvestor.com), a web based investment group, announced today that the group will acquire Condo Hotel units throughout Florida in the upcoming year.
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 the 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.
The number of units available today from conversions has swelled recently, and the success of these projects has given new life to older hotels in Florida. The demand for new construction has been extremely strong as well.
A major benefit to an owner of a Condo Hotel unit is stress-free ownership. When the unit owner wants to use the unit, they call the hotel and schedule a visit. During their stay, 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.
The hotel is generally 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, spas and concierge.
Condo Hotel units are difficult to finance. FloridaCondoInvestor.com’s prefererred lender, Maranatha Mortgage (www.MaranathaMortgage.com) has access to special financing for Condo Hotels.
The number of developments coming online has well outpaced the institutional lenders that have a desire to fund condo hotel purchases. These loans are considered “portfolio” in nature, and will in most cases be held and serviced by the lender who originated the loan, or a number of loans will be packaged together and sold to private investors. Since there is a lack of a true secondary market, many lenders do not actively seek to originate condo hotel paper.
It is particularly difficult to finance units less than 600 square feet that may or may not have a kitchen. This primarily affects the conversion market, as most of the units are true hotel rooms, and do not have the room for a kitchenette. The square footage number and kitchen requirement stems from the older “condominium” guidelines set by Fannie Mae, and many lenders have not updated their own guidelines to accurately reflect the unique characteristics of condo hotel properties. As a result, this is very much a niche loan product.
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.
Is it mandatory for the unit owner to be in the hotels rental program? Sometimes yes, sometimes no. Each development has different programs. In general, the rental program is voluntary, with a set amount of days per year the unit can be used.
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.
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.
Typically, the revenue is split 50-50 between the owners and management after expenses and HOA dues.
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, it is at the discrection of the management company to share the revenue from any of the hotel’s services (i.e. restaurants, spas, shops).
Anyone who is interested in real estate investing and would like to join this network at no cost can sign up at www.FloridaCondoInvestor.com. There is no cost to join the FloridaCondoInvestor.com network; Just the opportunity to work with some of the best in the business. Investors will have access to a million dollar database of Attorney’s, CPA’s, Mortgage and Real Estate specialists on every deal.
FloridaCondoInvestor.com is a web based investment group. Their philosophy is to locate excellent buying opportunities throughout the state of Florida and help their members create positive cash flow.
To contact Mike Linton for more information:
DiMucci Realty Company
Mike Linton / Realtor
3424 S. Atlantic Ave.
Daytona Beach Shores, FL 32118
(386)299-9275
www.FloridaCondoInvestor.com