Financial Benefits of Owning a Condo Hotel

By Todd Peterson

The rental revenue is shared with the professional hotel management company. You pay no upfront fees for this management. Instead, the management company takes a portion of the rental income that is generated. Although the revenue splits between owner and management company do vary from project to project, most hover around the 50/50 mark.

Condo hotels are strategically located in luxurious resort settings and premier urban destinations, which command top dollar for the nightly stays and are almost always marked by high year round occupancy rates. This combination of high nightly rental rates and high year round occupancy rates generally create a very desirable cash flow outcome.

In addition to the rental revenue that is generated, you can enjoy the appreciation that condo hotels typically experience, as well. Many condo hotels, especially the branded condo hotels, have seen double digit growth year after year, and have out performed traditional condos or single family homes in the same resort market. A common question is whether condo hotels can be resold like normal real estate. And the answer is yes. Condo hotels are fee simple deeded real estate. You buy and sell them just like you would any other form of real estate.

A common question revolves around financing and whether favorable rates can be attained. And the answer is yes. You’ll find that the biggest financial institutions in the world make loans on condo hotels and they are typically quite close to a loan that can be found for a traditional vacation home. Most condo hotel developers have even made arrangements with specific lenders so that they may offer their clients the most favorable rates.

And remember, there may be additional tax benefits of owning a condo hotel over a traditional condo. If the condo hotel is used for non-primary residence or residential rental, owners may be able to accelerating the depreciation on their condo hotel unit from 39 years, down to 27.5, 15, 7, and even 5 years. Be sure to consult with your accountant to see if the tax advantages can work for you. If your accountant is not intimately familiar with condo hotels, have him refer you to an associate who is.

Todd Peterson is the President and founder of the popular real estate site, PremiumCondoHotels.com

Visit http://www.premiumcondohotels.com to learn more about the condo hotel industry.

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