What Is The Rental Income for Condo-Hotel?

By
Real Estate Broker/Owner with Daytona Condo Realty, 386-405-4408

I was looking at the various units that you have listed under 100k. I would like to know the rental incomes expected on the various units and may want to buy some based on that information

I often receive similar requests. Can I provide such information? Actually, no. However, there is more to it, so here is my answer:

First and foremost. Condo-hotels are not income producing properties, and should not be purchased for rental income. It is simply the wrong type of properties.

Second. I am a real estate broker and I am helping buy or sell real estate. Condo-hotels are condos, where there is one-day rental and where there is a Front Desk running rental program for the owners.

If the purchase is based on the rental income, and this income is derived from the activities of a third party (rental company), this can be consturued as sale of securities.

I am not licensed to sell securities and I can lose my real estate license if I do it.

Is it a top secret, and can the Buyer get this information? Yes, it is part of due diligence (inspection period), and this information could be provided by the seller to the Buyer, but not by a real estate agent.

However, it is quite legal for us to give general information.

The condo-hotel is for your enjoyment as real estate, not because of its income, which is not guaranteed while expenses (Association Dues, Taxes, Content/Liability insurance, Special Assessments if any) are guaranteed. Your rental income from the activities of a rental company may or may not make it profitable.

We usually say that if the unit breaks even, then it is fine. If it is in the black, it is good.

Condo-hotels are not income producing properties like homes and apartments, and should not be bought because of this consideration.

Do they make any sense as investments? Yes, their investment value is in the resale if you buy them cheap and then sell at higher price. This is how they were and are successfully been used as investments, and rental income is just the way to help you offset the expenses while you own it.

Some of the condo-hotel are strict in terms of décor, furnishings and operations, and there similar units gets similar income (The Plaza Resort & Spa). Some of condo-hotels allow owners to furnish and decorate at will, and their income can depend on how nice the unit is in comparison to others, so one unit can break even and next unit can end the year in the red.

Though usually, I do not have the rental income figures, I ask my former clients how they are doing, and they either say they are in the black or that they are in the red. And sometimes this is about the units in the same condo-hotel.

Of course, it is common knowledge that rates in Ocean Walk, Plaza Resort & Spa, and Daytona Beach Resort & Conference Center are higher than in some other condo-hotels, so you can assume that they are doing a bit better.

So, if you are looking for rental income, let me know, and I can look at townhomes, and, maybe single family homes.

If you are interested in condo-hotels because you plan to use them for your and your family enjoyment and let it offset your expenses when you are not there, I can help you with that.

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

"If the purchase is based on the rental income, and this income is derived from the activities of a third company (rental company), this is a definition of securities.  ?????"

How does an expense become a security???  I don't get it.

Oct 21, 2012 08:40 PM #1
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Lenn - because when people are buying them based on the income or promise of income, it is selling securities.

You can read more here:

We have been warned by attorneys quite some time ago that if we discuss income, and advertise income, we violate the law and can lose a license

 

Oct 21, 2012 11:45 PM #2
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Thanks Jon. 

You are right of course.

If the seller or agents are promising a profit when the property is resold, it can be deemed an investment. 

We had the sellers of a community in MD go to jail for selling "shares" in a development rather than recording and selling building lots.

 

Oct 22, 2012 01:45 AM #3
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Actually, if the units are rented by owners themselves, that's fine. The problem is when people are technically buying the income generated for them by third parties. Now. they base their deciisons on the result of those third parties activities, so it is not linger selling real estate.

Oct 22, 2012 01:48 PM #4
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Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Wow you can learn a lot, I did not know this. Actually I have only sold 10 units in one of these style properties and they seemed to fizzle after the crash.

Oct 23, 2012 11:23 PM #5
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Charles - you sure do not want a letter from the attorney that you buyer is not happy with the INVESTMENT as s/he expected more money.

I would n't want to quote me promising them profit.

That's why I remove myself from discussing the income. I am selling real estate for their enjoyment, period

Oct 24, 2012 12:10 AM #6
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