A more reliable second home alternative to time-shares are condo-hotel. Condo-hotels are attractive, high-rise hotels found on the beach or in other such prime locations. Their prices range from around $250,000 to over $1 million – depending on its location, size and available amenities.
The Hilton, Four Seasons, Ritz-Carlton and Clarion are some of the biggest names in the hotel industry and they all have condo-hotel buildings. Donald Trump too has a few condo-hotels across the country, including a building in Fort Lauderdale and one in Florida.
Condo-hotel properties have been successful and boasting of nearly 100% sellouts within the first few months of being up for sale. A good example is the Ritz-Carlton Key Biscayne, a beachfront property with 188 condo-hotel units. They all sold out an entire year prior to completing the building.
Condo-hotels are hugely popular because once you buy a property, you buy a condo-unit in the hotel. This entitles you to the property and is then in a rental pool when you are not in residence. Developers however, cannot guarantee that properties will be rented out – management by a respectable and experienced hospitality group could result in a few weeks of rental income. This is one of the reasons for its popularity – which is the rental income can be offset by some of the costs of owning a vacation property.
The management company is in charge of renting the unit, and thus, you do not have to worry about such details. Most rental agreements entail the splitting of the income 50/50 between the management company and the owner.
Condo-hotels are also well favored because it is considered a private home even though it is located in a hotel setting. Owners are eligible for mortgage interest deductions and any other tax advantages that are bestowed upon those owning a second home. One disadvantage is that most condo-hotels do not let you reside in the unit all year around, as the management wants to rent out the unit when you are not in residence in order to profit from rental income. The maximum time of residency on a property is however determined by the management – and must be considered before you make the purchase.