Current asking rates for Hard Rock Hotel studios are ~$300/night (high end of the spectrum for Gaslamp). They probably get 50%. 4500/month cash flow assuming full occupancy. This income is taxable (let’s say 25% tax bracket). They have to pay property tax ($500/month) and possibly some sort of association fee. This leaves them with
$2500-2800 per month after tax. They have to pay $1700/month mortgage (not tax deductible), and they forego ~$900/month income (after-tax) they could have had if they took their 300k and put it on a 5% CD.
They will roughly break even if hotel can maintain full occupancy at those prices.
Appreciation/depreciation is a more difficult question. I can’t find any resale listings for Hard Rock condos. Ultimately resale prices will depend on how profitable those places really are.
