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CoronitaParticipantstocks in high tech. The weak dollar should make these companies number shine. Also, lots of acquisitions I'm guessing.
CoronitaParticipantstocks in high tech. The weak dollar should make these companies number shine. Also, lots of acquisitions I'm guessing.
CoronitaParticipantpk92108,
That was exactly the problem i was running into as well. a 400k condo-tel in Orlando came out to be about $300/night at around 79% occupancy. I just didn't see that happening consistently. Perhaps in orlando, it sort of can make sense because you have disneyworld…BUT, what I'm trying to figure out is what is so special about the Hard Rock in San Diego in downtown. Personally, if I'm going to splurge on a room and board in san diego, I'd stay closer to the beach.
CoronitaParticipantpk92108,
That was exactly the problem i was running into as well. a 400k condo-tel in Orlando came out to be about $300/night at around 79% occupancy. I just didn't see that happening consistently. Perhaps in orlando, it sort of can make sense because you have disneyworld…BUT, what I'm trying to figure out is what is so special about the Hard Rock in San Diego in downtown. Personally, if I'm going to splurge on a room and board in san diego, I'd stay closer to the beach.
CoronitaParticipantForgot to mention, there are a few articles on this subject as well. I'll include them here.
One thing, you definitely should get in writing all the fees, costs, and etc. There's a fee/cost for just about everything.
CoronitaParticipantForgot to mention, there are a few articles on this subject as well. I'll include them here.
One thing, you definitely should get in writing all the fees, costs, and etc. There's a fee/cost for just about everything.
CoronitaParticipantpk92108,
One advice, is that I think you owe it to yourself to find out about it either way. I mean, even though we didn't buy, going through the numbers and talking to different people did give us a clue into parts of how a hotel business works. It's really interesting. We just couldn't get the numbers to line up to give us a compeling reason to buy it only as an investment property. (We don't like florida, so we would never go there on a vacation).
The basic premise of how a condo-hotel works is that you own a room/suite in a hotel, but a management company runs all the collective rooms as a hotel, splitting the profits with each owner. Ok, well sort of. I'll get to that later.
The sales pitch as an investment is that because it is part of a hotel, you can rent the room out at a high hotel/room daily price. The price depends on how many stars the hotel is,amenities, etc similar to the price differential you see in a normal hotel. Sounds complicated to rent out your own room? The sales pitch will tell you don't worry, a management company will take care of that for you.
The thing that was a challenge for us was the condo-hotels have huge fees. There is the management fee, which is like an HOA fee. On top of that, if you want to rent your room/suite out, you typically must go through the management company running the hotel. They charge a percentage of the room rate. So for example, if they rent out your unit for $100/night at 10%, they collect $10 per night. On top of that, you have to share the costs that are common to running the hotel. So, this would be stuff like paying for maintanence on elevators, pools, common areas, free continental breakfasts that the hotel offers as a perk, hotel franchise fees, etc.
Now the other thing is that while techically, the management company is suppose to round-robin renting out all available rooms, there's no guarentee your room will be fairly rented out. In the ideal world, a hotel has 100% occupancy throughout the entire year. Unfortunately, that's not the case, so let's say more realistically the hotel has a 70% occupancy rate. Ideally, the 30% of the non-occupancy should be equally distributed to all rooms such that on average everyone has the same occupancy rate. Unfortunately, it doesn't always work that way. If you have a less desireable unit, people might not like your room as much as someone on the top floor, and hence your unit may be rented less than others. There's nothing about sharing "revenue". If your unit happens to rent less than others, the that's your problem. BUT, on the other side, you have to share the cost of the common things regardless of how your unit does. See why I said the revenue isn't always "equal"?
Also, I briefly mentioned about occupany rate. It's very important that you know how occupied that hotel will get. The price you can rent out will be largely set based on the hotel's "star" rating. IE: you generally can't ask the management company to rent your room out at whatever price you want. They must follow their guidelines. So the thing that will largely determine your profit or losses is the hotel's occupancy rate. We ran some numbers at a few units, and the numbers where such that in certain hotels you would break even at 75% occupancy, be slightly cash flow positive at close to 79%, etc, and that's assuming your cost estimates where correct. The problem is that it's really hard to predict what a hotel's occupancy rate will be if the hotel is new. And if the hotel is old, well it depends on lot of things such as the hotel franchise, And in general it depends on the dynamics of the tourism business where the hotel resides.
There are a couple of other minor things that is worth considering, that are less of issues. One is insurance. You can't get a traditional insurance policy on these condol-tels because they will be predominantly occupied by short term renters. Hence, insurance companies are less inclined to insure you because it poses a greater liability (IE more people can potentially sue you). Also, getting financing for something like this is more along the line of getting commerical financing. Also, should the time come for you to sell, they only people that are buying would be (1) people wanting a vacation home or (2) people who think it will make a good investment property. The issue with this is that if you can't make it to work as an investment, the person next in line won't either, because they really isn't anything he/she could do to make things more investment grade, except buying it at a lower price than what you paid for. and Also, you can't ever sell it to someone looking for a primary home because you aren't allowed to live there permanently.
Hence, why I draw some similarities to timeshares. The best deals from timeshares are buying them from others who just want to get out.
So in all, while it might be possible to actually be cash flow positive, we felt there were just to many variables that we didn't have control over to buy one as an investment. And if you take a step back. A hotel really should be owned and run by one entity to take advantage of all the economies of scale. By selling each unit to individuals and still centralizing management, I don't see how that would be better than one large entity with economies of scale.
If on the other hand, you wanted to buy a vacation home, but also wanted to recoop some of the cost, a condo-tel might make sense for you. But again, don't count on making money from it. Just like don't count on a timeshare allowing you to make money.
Also, what I found surprising was that a lot of people buying condo-tels in florida were folks from california who didn't yet own a primary home. When I asked them why they were spending money on a condo-tel in florida but not on their own primary residence, they said because they couldn't afford a primary home.
I found this to be quite strage. Because, i think it was pretty obvious that a condo-tel wasn't going to make that much money if at all. If you're already going to lose money on something, you might as well buy your own home overpriced, and find a few roommates to recoop some of the cost of owning. At least in the end, you get to live where your paying. But that's just me.Â
CoronitaParticipantpk92108,
One advice, is that I think you owe it to yourself to find out about it either way. I mean, even though we didn't buy, going through the numbers and talking to different people did give us a clue into parts of how a hotel business works. It's really interesting. We just couldn't get the numbers to line up to give us a compeling reason to buy it only as an investment property. (We don't like florida, so we would never go there on a vacation).
The basic premise of how a condo-hotel works is that you own a room/suite in a hotel, but a management company runs all the collective rooms as a hotel, splitting the profits with each owner. Ok, well sort of. I'll get to that later.
The sales pitch as an investment is that because it is part of a hotel, you can rent the room out at a high hotel/room daily price. The price depends on how many stars the hotel is,amenities, etc similar to the price differential you see in a normal hotel. Sounds complicated to rent out your own room? The sales pitch will tell you don't worry, a management company will take care of that for you.
The thing that was a challenge for us was the condo-hotels have huge fees. There is the management fee, which is like an HOA fee. On top of that, if you want to rent your room/suite out, you typically must go through the management company running the hotel. They charge a percentage of the room rate. So for example, if they rent out your unit for $100/night at 10%, they collect $10 per night. On top of that, you have to share the costs that are common to running the hotel. So, this would be stuff like paying for maintanence on elevators, pools, common areas, free continental breakfasts that the hotel offers as a perk, hotel franchise fees, etc.
Now the other thing is that while techically, the management company is suppose to round-robin renting out all available rooms, there's no guarentee your room will be fairly rented out. In the ideal world, a hotel has 100% occupancy throughout the entire year. Unfortunately, that's not the case, so let's say more realistically the hotel has a 70% occupancy rate. Ideally, the 30% of the non-occupancy should be equally distributed to all rooms such that on average everyone has the same occupancy rate. Unfortunately, it doesn't always work that way. If you have a less desireable unit, people might not like your room as much as someone on the top floor, and hence your unit may be rented less than others. There's nothing about sharing "revenue". If your unit happens to rent less than others, the that's your problem. BUT, on the other side, you have to share the cost of the common things regardless of how your unit does. See why I said the revenue isn't always "equal"?
Also, I briefly mentioned about occupany rate. It's very important that you know how occupied that hotel will get. The price you can rent out will be largely set based on the hotel's "star" rating. IE: you generally can't ask the management company to rent your room out at whatever price you want. They must follow their guidelines. So the thing that will largely determine your profit or losses is the hotel's occupancy rate. We ran some numbers at a few units, and the numbers where such that in certain hotels you would break even at 75% occupancy, be slightly cash flow positive at close to 79%, etc, and that's assuming your cost estimates where correct. The problem is that it's really hard to predict what a hotel's occupancy rate will be if the hotel is new. And if the hotel is old, well it depends on lot of things such as the hotel franchise, And in general it depends on the dynamics of the tourism business where the hotel resides.
There are a couple of other minor things that is worth considering, that are less of issues. One is insurance. You can't get a traditional insurance policy on these condol-tels because they will be predominantly occupied by short term renters. Hence, insurance companies are less inclined to insure you because it poses a greater liability (IE more people can potentially sue you). Also, getting financing for something like this is more along the line of getting commerical financing. Also, should the time come for you to sell, they only people that are buying would be (1) people wanting a vacation home or (2) people who think it will make a good investment property. The issue with this is that if you can't make it to work as an investment, the person next in line won't either, because they really isn't anything he/she could do to make things more investment grade, except buying it at a lower price than what you paid for. and Also, you can't ever sell it to someone looking for a primary home because you aren't allowed to live there permanently.
Hence, why I draw some similarities to timeshares. The best deals from timeshares are buying them from others who just want to get out.
So in all, while it might be possible to actually be cash flow positive, we felt there were just to many variables that we didn't have control over to buy one as an investment. And if you take a step back. A hotel really should be owned and run by one entity to take advantage of all the economies of scale. By selling each unit to individuals and still centralizing management, I don't see how that would be better than one large entity with economies of scale.
If on the other hand, you wanted to buy a vacation home, but also wanted to recoop some of the cost, a condo-tel might make sense for you. But again, don't count on making money from it. Just like don't count on a timeshare allowing you to make money.
Also, what I found surprising was that a lot of people buying condo-tels in florida were folks from california who didn't yet own a primary home. When I asked them why they were spending money on a condo-tel in florida but not on their own primary residence, they said because they couldn't afford a primary home.
I found this to be quite strage. Because, i think it was pretty obvious that a condo-tel wasn't going to make that much money if at all. If you're already going to lose money on something, you might as well buy your own home overpriced, and find a few roommates to recoop some of the cost of owning. At least in the end, you get to live where your paying. But that's just me.Â
CoronitaParticipantI got a lot to say about condo-hotels, as my wife and I explored buying a few in Orlando…Unfortunately, I'm too busy right now to give my full study of them…
Suffice to say, imho it makes more sense if you buy one because you want a vacation home to use some of the time, but what to recoop some of the costs by renting it out when your not there…But as an investment, I things are much more complicated than traditional homes/condos. Suffice to say, you have to deal with everything you normally have to deal with in a rental, plus on top of that deal with hotel occupancy rates, hotel management fees, management rental fees, short term insurance issues, etc. In short, it's probably not something you want to do as a first investment property.
Also, one big drawback for most condo-hotels. You cannot occupy it as permanent residence. IE: you cannot live in it 365 days a year. Translation: when you sell it, the only people buying it are either vacation home owners or "investors".
I would treat these 1 step above a timeshare, which advantages over a timeshare. But not an "investment".
Also, something you want to keep in mind about condo-hotel. Getting a loan for a condo-hotel is along the line of getting a loan for a commerical property versus residential. Also ,getting insurance for short term tenants is quite different from a long term rental. Many insurance companies don't want to insure short term rental, because it's a larger liability.
CoronitaParticipantI got a lot to say about condo-hotels, as my wife and I explored buying a few in Orlando…Unfortunately, I'm too busy right now to give my full study of them…
Suffice to say, imho it makes more sense if you buy one because you want a vacation home to use some of the time, but what to recoop some of the costs by renting it out when your not there…But as an investment, I things are much more complicated than traditional homes/condos. Suffice to say, you have to deal with everything you normally have to deal with in a rental, plus on top of that deal with hotel occupancy rates, hotel management fees, management rental fees, short term insurance issues, etc. In short, it's probably not something you want to do as a first investment property.
Also, one big drawback for most condo-hotels. You cannot occupy it as permanent residence. IE: you cannot live in it 365 days a year. Translation: when you sell it, the only people buying it are either vacation home owners or "investors".
I would treat these 1 step above a timeshare, which advantages over a timeshare. But not an "investment".
Also, something you want to keep in mind about condo-hotel. Getting a loan for a condo-hotel is along the line of getting a loan for a commerical property versus residential. Also ,getting insurance for short term tenants is quite different from a long term rental. Many insurance companies don't want to insure short term rental, because it's a larger liability.
CoronitaParticipantcooprider14,
1) There is no population that will consume more ridiculously than americans.
2) The disparity in wealth between rich and poor is far greater in china.
3) A lot of the real estate appreciation that occurs in china happened because of speculative foreign investments. Chinese governments have been exercising considerable controls into effect to curb for investments. When eventually the can control it, the cyclical speculative nature of real estate will stop, because your average chinese can't afford real estate.
4) The chinese financial system lack the proper controls and checks and balances, anything small problem will get manified, because any problem has no precedence. A lot of rules/regulation do not actually come from the central government, but from the provincial government, and are constantly changing.
6) Like I said before, the market system in China isn't really a free market. It's heavily regulated.
7) A lot of the wealth that your average chinese is counting on has been on speculative stock market investing and real estate investing, not on income alone. When the stock market/real estate market crashes, which it will, this will wipe out average joe chinese.
Happened every other asian country….And no, things aren't going to be different this time in China.
The argument that the labor pool in china is so large…Well, a lot of that labor pull cannot be tapped for some reason or the other. I don't know if any of you folks have been noticing…But a lot of stuff is no longer coming out of China. Some of it is now coming out of Vietnam. Why? Because the cost of labor in china is increasing. Check out things like furniture and clothes.
You might not like the weak dollar, but I'm going to take a contrarian viewpoint here. I'm guessing corporate earnings for U.S. tech companies are going to look pretty good the next couple of quarters.
CoronitaParticipantcooprider14,
1) There is no population that will consume more ridiculously than americans.
2) The disparity in wealth between rich and poor is far greater in china.
3) A lot of the real estate appreciation that occurs in china happened because of speculative foreign investments. Chinese governments have been exercising considerable controls into effect to curb for investments. When eventually the can control it, the cyclical speculative nature of real estate will stop, because your average chinese can't afford real estate.
4) The chinese financial system lack the proper controls and checks and balances, anything small problem will get manified, because any problem has no precedence. A lot of rules/regulation do not actually come from the central government, but from the provincial government, and are constantly changing.
6) Like I said before, the market system in China isn't really a free market. It's heavily regulated.
7) A lot of the wealth that your average chinese is counting on has been on speculative stock market investing and real estate investing, not on income alone. When the stock market/real estate market crashes, which it will, this will wipe out average joe chinese.
Happened every other asian country….And no, things aren't going to be different this time in China.
The argument that the labor pool in china is so large…Well, a lot of that labor pull cannot be tapped for some reason or the other. I don't know if any of you folks have been noticing…But a lot of stuff is no longer coming out of China. Some of it is now coming out of Vietnam. Why? Because the cost of labor in china is increasing. Check out things like furniture and clothes.
You might not like the weak dollar, but I'm going to take a contrarian viewpoint here. I'm guessing corporate earnings for U.S. tech companies are going to look pretty good the next couple of quarters.
CoronitaParticipantyou have to be kidding right? I won't go there even. The bubble mania in both real estate and equities there make things here look like child's play. Enjoy any china etf now while you can. That crash will look several times worse than here.
CoronitaParticipantyou have to be kidding right? I won't go there even. The bubble mania in both real estate and equities there make things here look like child's play. Enjoy any china etf now while you can. That crash will look several times worse than here.
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