Should I Buy A Condo Hotel Instead of a Condo?

A condo hotel is a condo that operates legally as a hotel with a front desk and other hotel amenities. Examples are buildings like: 1 King West, King Edward Hotel, Thompson Hotel, just to name a few. They are usually large high-rise luxury hotels operated by big name hoteliers or boutique chains. The hotels have multiple private condo units known as "private residences", allowing individual investors to own a full-service vacation home that offers amenities like pools, spa, fitness, fine dining, room service, business centre, housekeeping and more. 

Conceptually, when the owner is not using their own unit they may rent it out themselves or enter it into the hotel rental pool where it would be offered as a suite for short term rental.

Ideally the rental revenue helps offset the owner’s expenses. The on-site management company takes care of upkeep, maintenance and interaction with renters making it a hassle free form of home ownership.

Most condo hotels are meant for short-term occupancy and often stipulate the maximum number of days an owner may occupy the suite, with only a few projects allowing year round permanent residency. The owner may resell the unit at any time and retain the profits.

Things To Keep in Mind When Purchasing a Condo Hotel:

• Many investors have lost money on this type of deal. Don't fall into this trap!
• Surprisingly, the rents have been lower than anticipated.
• The maintenance fees are higher than most condominiums as there is a built in management fee and perhaps a refurbishment fee.
• Property taxes are higher than similar condos with the same square footage pushing the costs even higher.
• Financing can be an issue as only a few lenders are funding this type of product.
• When reselling this kind of product, you are marketing to a very small pool of buyers making the demand low.

Moral of the Story: Stay Away From Purchasing Condo-Hotels as an Investment Vehicle. If you absolutely love the idea of a hotel residence for personal living, certainly go for it! You are buying the lifestyle for everyday living. If you're looking for a sound investment to net the most profits, I can certainly steer you in the right direction with other real estate choices. If you'd like some suggestions, you're welcome to email me any time at [email protected].

-Sandy Sold   www.sandysold.ca   416-988-0042