Condo Hotels: Information On Buying a Condo Hotel in Miami, Florida
With almost every new development selling out during preconstruction, condo hotels are one of the hottest types of property on the real estate market. Sprouting up all over the country, these luxurious properties are primarily used as investments, held until values appreciate and then sold for hefty profit. Their potential use as vacation homes is merely a fringe benefit to the savvy real estate investor.
The condo hotel industry is at its apex in South Florida, particularly on the Miami oceanfront where all the available land is being developed at a speedy pace. Now builders are erecting inland Miami properties—which tend to be cheaper without ocean views, but are still just blocks away from the beach—or looking northward in Florida to Ft. Lauderdale and Sunny Isles, FL. Those who still want to stay in the lucrative Miami market—even with the lack of undeveloped land—are buying existing properties and either renovating and upgrading them or demolishing them and starting from scratch.
Due to the need to match the value of the property to high value of oceanfront land it sits on, most condo hotels are of the 4 or 5-star quality. There is the greatest demand for the amenities of the top-notch condo hotel, especially if it has a well-known, trusted franchise name attached. Many condo hotel developments take reservations for half the project before hard contracts are signed and any money changes hands and several of the more anticipated developments have sold out in a matter of a few months rather than the two-year estimate. These properties are so popular today that developers no longer need to discount prices at the onset of the sales process to spark investor interest in the project, and the prices continue to rise—often three to five times—during the development process.
Developers have also cracked down on their contracts, outlawing the previously common practice of preconstruction buyers flipping their units before closing time, a practice that put the investor and developer in fierce competition while the latter tried to sell off the remaining units. Resale units do come on the market at times, but not often and it is difficult to find a good deal. Some condo hotel management companies require that the buyer hold the property for a certain period of time before reselling, some only allow ownership transfer within the buyer’s family, while others require that the unit be listed through their company. As obstacle-ridden as the reselling process may be, the resale value of a condo hotel unit is generally good, and typically much higher than the resale value of timeshares.
The condo hotel’s differences from the standard timeshare/ fractional ownership vacation home contribute to their recent popularity. Whereas a several owners of a single property can make dividing usage time difficult, the single ownership policy of condo hotels eradicates this problem. Year-round ownership also allows the investor to rent out the property for extra income, although experts recommend that this be seen as bonus cash rather than a full living.
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