Real Estate Magazine

Dallas, TX September 22, 2006 — Frank Arena an expert in Real Estate specializing in Condo Hotel gives top ten tips when considering condo hotel condotel buying.10. A destination where millions of visitors travel to each year such as a ski resort, convention center, or Disney World. This creates greater occupancy rates.
9. A nationwide reservation system to help generate rental of the property.
8. A known brand name with the expertise of a major chain behind the investment.
7. Full service front desk 24 hours a day 7 days a week.
6. Full daily housekeeping staff on premises.
5. On-site amenities such as pool, fitness room, and restaurant.
4. Established management company with years of experience including at least 10 hotels under management providing lower operation fees no more than 5 percent of revenue.
3. Annual HOA fees less than 8 percent of purchase price.
2. HOA minimum reserves of at least $25,000.
1. Price less than $310 per square foot.When looking at condo hotels, look for the lowest cost per square foot money can find. The risk is much less with improved chances of making money over time. The lower the rental rates, the higher the occupancy. Find units that rent from $50-$125 per night. This type of condo hotel seems to stay busy year round since it offers good value to the consumer.Condo Hotels have become very popular over the last couple of years. These are a lifestyle investment where the investor could own a number of condo hotels in many states in which you could spend time in places like Orlando, Florida in the winter, the mountains in the summer, Christmas in New York or wherever a vacation is desired. Prices for condotels start at $99,900 in Kissimmee/Orlando Florida to many millions.Some of the best information and news articles are found on a website such as http://www.condotel.bizBe a smart condo hotel investor do your math and read http://www.realestateinfo123.com for current trends on real estate.About Frank Arena
Frank is a freelance real estate marketing journalist who writes on real estate markets educating the investors who they needs to know. 

All Condo hotels are not alike! Be a smart investor says Frank Arena.

Case study 101

There are many different types of condo hotels. Condo hotels sell for $300,000 to millions of dollars. Let’s review two examples of condo hotels being offered in the Orlando/Kisssimmee Florida area.

One option is new construction ranging from $400 per square foot to $700 per square foot.

A second option is conversion of an exiting franchise hotel. These units are 331 sq.ft. and sells for $272 psf. Let’s compare the two investments and see which one makes good dollar and cents.

If you purchase a 400 sq. ft. unit for $600 per sq. ft., your purchase price would be $240,000. With 10% down and 30 year amortization at 6.5% interest rate, payments would be $1,390 per month.

The monthly income for this condo hotel based on the national occupancy rate average of 57.1% (percentage of hotel rooms used) and national average daily rate of $94.94 (the amount charged per room), according to Smith Travel Research would be $1700. per month.     Most condo hotels take 50% of the profit as their fee for handling daily operations plus an HOA fee. For this example let’s keep the HOA, property taxes the same on both case studies.

57.1% (national average rented) x 30 days per month = 17 days rented

17 days rented X $100 per day =     $1,700 per month income
50-50 split with management company = $ 850 per month to them and $850 per month to owner

Monthly mortgage $1,390 per month
HOA fee               515 per month
Property Taxes     100 per month
Insurance          200 per month

Total Expenses    $2,205 per month

Expenses $2,205. – Income $850 = Monthly loss $1,355 X 12 months = $16,260 loss per year

This would obviously not be what you would call a smart investment.

Now lets do the math on the existing franchise conversion unit selling for $272 psf. For simplicity sake, rounded cost is up to $300 psf.

57.1% x 30 days per month = 17 days rented

17 days a month X $100 per day = $1,700 per month
(So far all is equal regarding income)
4% Management Fee = $68 per month to them and $1,632 per month to the condo hotel owner

Monthly Mortgage $567
HOA fee          515   
Property Taxes     100   
Insurance (included in HOA fee)     0

Total Expenses $1,182

Income $1,632 – Expenses $1,182. = Net monthly profit $450 X 12 months = $5,400 income

Now that is what you would call a smart investment.

That seems like a very fair deal. Don’t even look at condo hotels that are splitting revenue 50-50. Pay no more then 10% per month in management fees. The best management programs are under 5%.

Savvy people are always looking for real property in their state. But smart money goes where the deals are. Even if the value is thousands of miles from home, in today’s real estate market you have to go where the investment makes dollar and cents.

We hope this article helps prospective investors in condotel short for condo hotel smarter investor. Make a smart condo hotel investment

About Frank Arena
Frank is a free lance journalist who writes for http://www.investsmartnewsletter.com