I can’t sit here and paint a perfect picture about condo-hotels because it wouldn’t be me. The condo-hotel concept has become a very popular trend mostly because of the incredible vacation and urban destinations as well as the resort-style luxuries that these have to offer, especially when luxury hotel chains back these up. Wouldn’t you be prone to investing in a project that includes Marriott, Four Seasons or even Ritz-Carlton?…..that’s what I call bringing “credibility” to the closing table.
The concept does have risks for both the developer and the condo buyer and it has to do with the way the actual sales are structured. Mike Schneider, an Associated Press Writer explains that if units are sold with the expectation that the buyer will earn money or get tax benefits from the purchase, then these would be considered “securities” by the Securities and Exchange Commission and could only be sold by a securities broker, which would mean that the developer would be an easier target for law-suits under the SEC’s anti-fraud rules.
Most developers choose not to sell their projects as securities and are thus prohibited from discussing economic or tax benefits from a rental arrangement and no projections on rental income can be discussed.
This is HUGE to a prospective buyer because you could be buying without getting all the facts. It is crucial that you work with someone that can produce those projections and analyze the numbers so that you know where you stand when in comes to the investment.
Our customers benefit from Rick’s accounting background, since he can produce these projections and help customers make educated decisions with complete financial information necessary to purchase condo-hotels.
Look for Part II of this series Condo Hotels – pros and cons – Part II with expectations from condo-hotel buyers.
other sources for condo- hotels information:
- Miami, Florida – Ines Hegedus-Garcia – Condo Hotel Craze
- The Mortgae To Go Guy – David Podgursky – Florida Mortgage Loans | Condo-Hotel/Condotel Financing Explaine
- Clearwater Beach, Florida – Cyndee Haydon – Clearwater Beach Florida Condo Hotels – growing option in Luxury Vacation Homes and Resort Ownership
**originally published on July 18th, 2007**