Condos with a Hotel Component: right for some, not for others
February 21, 2017
Some South Florida developers looking for ways to make their products stand out are adding a hotel component to their condominiums. The concept began as hotels that offered rooms for sale. Owners could stay in them when they visited and rent them out when they were living in their primary residences.
More recently, the concept has evolved into a couple of different variations; Some developers incorporate condominum residences into a building that is also a hotel. Others construct a separate building for residences that is next to or very near a hotel.
Either way, the condominium owners have access to all the amenities of the hotel such as maid service, spa, restaurants, fitness centers and room service. Sometimes the residences share amenities with the hotel. Other times, the residences have their own separate amenities but also have access to those offered by the hotel, which ofter carries a well known flag like Starwood or Hilton.
There are advantages and disadvantages to owning a condo with a hotel component compared to traditional condo ownership. Certain aspects of the concept vary from property to property. If the unit is a primary residence, it can be a homesteaded for tax purposes in some projects. In others, that may not be possible. If the residences and hotel share a single set of amenities, maintenance fees may be higher because residences are paying for the upkeep of the hotel amenities.
A buyer should be careful to ask questions and be very clear about the rules. It is a good idea to look at several projects and compare them.
One major advantage is that the owner of the conod with a hotel component can rent out the unit whenever he or she is not using it. Many traditional condos have rules that either preclude renting entirely or limit the number of times and lengths of stays that an owner can offer.
In most condos with a hotel component, an owner can put the unit into a rental pool in exchange for a percentage of the funds collected, or rent is out privately without paying a premium. If the unit is put into the rental pool, however there will probably be blackout dates when the owner can’t use it, and there is no guarantee that it will be rented.
Developers say the concept is popular in South Florida buyers because it makes them feel like they truly are on vacation when they stay in what is often a second or even third home…
The Gale, a 129-unit condo and hotel project on Fort Lauderdale Beach by the Newgard Development Group, will have separate buildings for residences and hotel rooms. “Its a residential condo building directly net to a hotel,” says sales director Ivan Ramirez. “The residences have their own amenities. Residents have access to all the amenities of the hotel, but the hotel guests can’t access the residential amenities.”