Buying a Condo-Hotel in Daytona Beach. Real Life No-Nonsense Scenario

I was showing a studio unit in the Plaza Resort & Spa to a couple form Orlando. I met with James before, and I e-mailed him. He is down to earth no-nonsense small business owner with a good sense of humor. A day after showing I sent him and e-mail and below is the actual e-mail communication with James (name changed), practically unedited. Why do I do that? I thought that the best blog would be a real situation and a real case study, and this is the real one. We are talking about a unit in the Plaza Resort, a bank owed property (REO), which popped up at unbelievable $95,000. I e-mailed to 140 people in my database, and James came to see the unit.

---- Jon Zolsky <......................> wrote:

"James,
After sleeping it over, what do you think?
Would be great to hear form you.
Jon Zolsky, broker"

Within an hour I got an e-mail:

"Jon, we tend to think the association fees are too high. Many reviews also suggest that previous guests would NOT return because of lack of bathroom space, room quality for the price, and those on the west, noise from the street. So we are still considering. We agree with most reviews that the rooms s/b more luxurious after a $70M makeover. Please keep us apprised of any SURPRISE moves...James"

And here is my e-mail to James:

"James,

Of course, I could write a nice response, very politically correct, but you are not the person that needs it. I hope you are not going to get offended if I say what I think. And we know that this is simply theoretical discussion as the unit should go under contract any minute (I hope).

You did a great job, but I think you are missing the point.

Forget reviews. They are irrelevant. You are not looking at vacationing here, so what they say means nothing. U are the buyer, so what you need to know is that the property enjoys the highest occupancy in Daytona Beach, as far as I know.  That covers all the reviews. As long as you are interested in this area, this is the most important parameter for you in terms of whether people like or dislike, not what they write.

The reason I do not watch reviews is that I have seen the worst reviews for Fountain Beach Resort and they were appreciating at $15K a month at the very same time. People made a lot of money. And others were reading reviews... and may be still reading them, trying to make sense from something that does not pertain to owning the condo-hotel.

I do not know how you are looking at this, but this is the only condo-hotel property in all that time I am dealing with the condo-hotels (since 2002) that is 4.5 times under a closest comparable unit. OK, you would consider maintenance fee of $350 reasonable for this property. The difference of $179 a month in 4 years would be just under $8,600. And you would get at sale $374,000 (before closing costs). But even this is not right. They have the occupancy consistently above 50% (from 53% to 58.5%). Second comes Oceanside Inn with 46%. Fountain Beach would be under 30%, so they more than offset the high fee. But the truly important thing is that any luxury property HAS TO HAVE reasonably high maintenance fee. Otherwise it turns into crap. Serious buyers should shy away from low monthly maintenance fee properties. $500 in Hawaiian Inn and $500 in Plaza. Does it make any sense? One is at the low end and the other at the high end.

Good luck waiting for a better deal, just do not let you miss the train, as if this was not convincing, the only convincing would be when I sell it (if my guy buys it now) and will send you a copy of the Settlement statement showing $499,900 as the selling price (I did this with one of my tough customer, when I sold the unit in Ocean Walk that he refused to buy for less than half of what I sold it for in 2 years, and I sent him the copy of the statement for $499,900.

It may be a false feeling that analyzing it the way you do has anything to the value. It absolutely does not. You will simply pass on all good deals because if Plaza reviews are not good enough, you would not find any better review in this area.

Again, no pun intended. I do not have the Crystal ball, and I am OK with that. I am not OK that I have invested in another unit and could not get this unit for myself. Just can't sleep, I truly can't.

Best of luck, and I hope the business will be better soon. We both need it.

Jon Zolsky"

This unit is under contract with another client of mine, and is closing August 19. James signed a contract for another unit, the other best deal in the resort. The offer has been accepted by the Lender, and the closing is in mid August.

If you are looking for a very affordable alternative to having a vacation property on the ocean and what you read makes any sense, give me a call, or just drop us a line.

   Jon Zolsky, Your Daytona Condo-Hotel guru
   www.DaytonaCondoHotel.com