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Condo Hotels: a smooth Option

Estimated 40,000 to 60,000 Condo hotels are being developed for sale in the next 1.5 years. Who will buy all of these Judging? Is there a bubble in condo hotels? Does the consumer even demand Condo Hotel units?

The real estate markets may have slowed, but we all must remember that we have been setting records in sales. The slowdown is a return to average historical pace.

Unlike traditional judge's judge hotels have not been over-built or delivered. In the Miami area alone is 60,000 + / – traditional homes on the market or coming on the market. The national supply of Condo Hotel units are less than this figure. The 3 largest markets in Condo Hotels in the U.S. is Las Vegas, Orlando and Miami, these are also three of the strongest hotel markets with high demand from baby boomers to retire to housing. 78.2 one million baby boomers will reach retirement age over the next 14 years. The demand for Condo Hotel is just beginning to awaken and supply is a fraction of the total second home or a hotel development market.

Also, unlike traditional condo, can judge the hotels produce smooth rents.

The hotel market marks a record year, and demand is growing, this market is based on potential investment value of Condo Hotel sales. If the supply of new hotel product is constrained by construction costs and as many existing rooms have been converted to Condo Hotel ownership economics of condo hotel owners can improve.

As mortgage lenders to Condo Hotel consumers, we have been able to get to know many buyers and learn first hand their motivations and demographics. Mostly our customers are real estate investment minded and savvy second home buyers seeking a second home for less than two to eight weeks a year for personal use. They have owned other rental properties, and many have invested in commercial properties. They often site the desire for recognition and tax benefits of a 'cap rate' but they often have a thorough understanding of the income potential of condo hotels.

We are experiencing an increase in the number of buyers is using funds from the 1031 exchange to buy a condo hotel unit. The average age of our patrons is 51 years old, solidly in the baby boomer demographic. They Most are self-employed or an average of 13-years in their current employment positions. Including have a majority of these buyers expressed interest in buying more than one Condo Hotel unit in different destinations, for personal use, diversification and shifting seasonal cash flows from properties.

For over 20 years, has the resort market in Condo hotels shown a viable alternative to traditional condominiums and second homes. The most numerous examples are in ski country, where families have purchased and used Condo hotels second homes with a rental program to offset costs. But this next generation of the Condo hotel buyers may look different as more people understand the benefits that this real estate product.

Wide acceptance of the Condo Hotel as a second home market is not yet fully developed. The media is full of conflicting stories about Condo hotels, and consumers are reasonably skeptical. The broad market is not too soon to introduce a new concept, the niche buyers are the first consumers to embrace any product and Condo Hotel has proved no different.

Some projects have niche themes to attract a certain narrow demographic of the buyer. For example, as college alumni want to get condo hotel ownership to the buyer events. Downtown pied-à-terre locales that appeal to suburbanites or companies that frequently send employees to a center Condo Hotel destination just beginning to come to market and attract a new buyer class. Resorts that offer lifestyle services and facilities is to find 'member-minded' buyers, who may live around the corner. These new consumers will define the next phase of this industry.

A condo hotel is more than real estate, it is a lifestyle purchase a long term investment, and a trend that is beginning to identify its requirements.

About the Author

Bob Waun is the CEO of Vacation Finance, America’s First Second-Home Lender. Please visit www.vacation-finance.com. This article was originally published in the Winter 2007 issue of 2ndhome® Journal, http://www.2ndhome.net, a digital magazine for owners, buyers and sellers of vacation homes and investment properties.

1031 Exchange and Vacation Homes