10 Things You Need to Know About Condo Hotel
1.) No U.S. lender understands the nuances of condo hotel better than Vacation Finance
2.) Condo hotel loans are not salable to Freddie Mac or Fannie Mae and therefore carry slightly higher rates and stricter loan qualification terms.
3.) Condo hotels are both commercial and residential property, and so they are both a second home and investment property. This makes them unique in the world of real estate.
4.) The condo hotel concept is not new. It is decades old, and has recently reemerged in many vacation home markets.
5.) Condo hotel units by definition should produce income, buyers should consider this income as an offset to the expense of owning a second home.
6.) There may be additional tax benefits of condo hotel over a traditional condo, as the furniture, fixture and equipment are included in the sales price. Get your tax preparer’s opinion about your purchase.
7.) Hotels produce income in-season at higher rates than at low-season. Cash flow is not consistent, and condo hotel owners should budget accordingly. Interest-only loans help consumers control cash flow.
8.) SEC rules restrict developers from any discussion about potential income a condo hotel may or may not produce. This leaves a void of data for the consumer, and the consumer should do their own due diligence. Lenders do not want to be involved in projects that are selling ‘income potential’. The right consumer is a Lifestyle-Seeking buyer.
9.) Condo hotel association dues typically include reserves for replacement of furnishing and repairs. These reserves are important to future increases in expenses.
10.) Great hotels typically exist in “rare-air” locations. Location, location, location applies to condo hotel.
Useful links and much more information at:
www.Vacation-Finance.com
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