Here’s a rant… Jon Pedersen and I were talking tonight, he spoke to a client who owns a condo hotel unit at Trump NYC. He bought it a couple years ago. It didn’t cash flow at first, it cash flows now, the owner said “I wish I’d bought 10 of them!” and he is buying another at Trump Chicago now. True words from a real condo hotel owner…
Another client of ours bought 6 condo hotel units in 2006, he has since sold 4 of his condo hotel units, and kept the 2 best suites in the hotel. He cash flows on both units monthly and use the units personally whenever he is in downtown. A raving fan of the condo hotel concept!
At another project in the Florida Keys, a client who bought 2 adjoining suites in 2005 recently told me “we go there as often as we can, love the service and we are cash flowing positive in the high season, but I really don’t know how it shakes out year round.” It doesn’t matter, its the best second home value for the money.
The reality is that the RIGHT buyers of condo hotel are seeking a second home with service and hassle free lifestyle, and they truly don’t care about the monthly cash flow. It’s a nice offset to the expense of ownership but its not the primary driving force behind buying this product. Realistic expectations is absolutely paramount.
I own 3 condo hotel units, 2 break even, 1 looses money, but far less than our cottage once cost. I have 3 ’second homes’ without any hassle. I care that the hotel is being managed properly, efficiently and that my asset is growing in value. I want to know that I’m getting a fair split of the rental income my assets generate when I’m away. I want to be greeted by our hotel staff upon arrival at the hotel as ‘an owner’, at our cottage I was greeted by cobb webs and utility bills.
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