Condotels?
While Columbus is not Daytona Beach or Miami so we probably won't be seeing condotels, it is an interesting concept and not that far removed from what we're seeing in places like the short north and olde towne east where duplexes and apartment buildings are going condo. . . . .Excerpts from the Inman News Article . . . . . . .
Condotels catch on fast -- maybe too fast
Thousands of units under way in major real estate markets
Tuesday, June 20, 2006By Glenn Roberts Jr.Inman News
Robin Glass, Coldwell Banker Pacific Properties
Charlotte Chipps, an Ohio schoolteacher, bought a condominium-hotel unit last year in Daytona Beach, Fla. A developer had bought up a couple of hotels in the area and converted the buildings into condotels -- which allow buyers to purchase individual units and gives them the option to enroll in a rental program that opens their units to hotel guests for a share of the rental income.
"It was sort of a whim," she said. "I do own a house in the Daytona area that I rent. I had just that little bit of experience. I'm not a person with any money. I just thought that this would perhaps be an investment for me. If values continued to go up, I would keep it for two or three years and make $20,000 or $30,000."
Meanwhile, at the southern end of the state, a swarm of new luxury high-rise condotel projects are in the works. The surge of condotel developments has hit other coastal markets too, and there are several high-end projects under development in downtown Las Vegas.
Condotels run the gamut from aging, low-rise hotel conversions to ultra-luxury, new high-rise towers backed by big-name developers and hotel chains. The condotel movement even has its own association, formed this year: the National Association of Condo Hotel Owners, or NACHO.
Condotels are not just a flash in the pan, says Dante Alexander, president and CEO for the condotel association, though they aren't typically a cash cow for owners, either -- and buyers should be aware of all of the costs and complexities associated with these properties.
"People like to refer to it as a trend," said Alexander, who formerly worked for Starwood Hotels & Resorts Worldwide Inc. "Now, admittedly, it's a segment. But it is really going to be much more than a segment." Condotels, he said, will represent "a significant quotient of hotel real estate in the country," and they are already making waves in some international markets.
There is a risk of over-building in some popular condotel markets, and lenders have heightened requirements for projects, though Alexander said he expects a cooling-off period and a shift by condotel developers to broaden the range of prices and locations for the projects to appeal to a larger pool of buyers.
"Everybody is pulling back a little and appropriately so. There is a little bit of oversupply going on. It shouldn't be a frenzied environment, and it has been a frenzied environment," he said.
While attending a real estate conference, Alexander said another attendee asked, "What if (the condotel market) implodes?" Alexander's response: "What if it doesn't?" Based on the demographic trends of baby boomers and their children, Alexander said he expects that in the next couple of years "we're going to wish we had more" condotels.
He advises prospective buyers to purchase a condotel unit because they plan to use it, not because they plan to quickly flip it and make a quick buck. A common misconception is that the rental profits of a condotel unit will generate profits for the owner. But with insurance and maintenance and mortgage costs, owners shouldn't expect to earn any money in the short term, Alexander said. "It's an expense. It's going to be like owning any other piece of property."
posted by Joe Peffer - Full Time Professional Realtor @ 11:26 AM
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