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What do you think about Condotels? I was browsing some real estate sites and saw some unusually cheap places. I noticed that they were rooms for purchase, in HOTELS! Pretty interesting concept, to have your home in a hotel. Has anyone done this, and what was your experience like?
Hawaii Real Estate Central - Honolulu Board of REALTORS (http://www.hicentral.com/properties/prop_detail.asp?listnum=1109549&type=mls - broken link)
What do you think about Condotels? I was browsing some real estate sites and saw some unusually cheap places. I noticed that they were rooms for purchase, in HOTELS! Pretty interesting concept, to have your home in a hotel. Has anyone done this, and what was your experience like?
Hawaii Real Estate Central - Honolulu Board of REALTORS (http://www.hicentral.com/properties/prop_detail.asp?listnum=1109549&type=mls - broken link)
It's very difficult to finance - lending standards are 35% down for condotels (if they finance it) - and in your example, 246 sq ft - that is literally a small hotel room space. You mentioned you have a family - you won't fit.
And ouch - $639 monthly fees - way out of line for that space.
Yeah I can imagine financing would be difficult for a unique arrangement. No desire to live in a hotel for us , but seemed an interesting concept for discussion. I wonder if room service is included in HOA fees
Yeah I can imagine financing would be difficult for a unique arrangement. No desire to live in a hotel for us , but seemed an interesting concept for discussion. I wonder if room service is included in HOA fees
For the HOA fee they are charging - room service and the pool/amenities of the property are likely included. Of course you pay for that food.
Most "condotel's" are nothing more than a hotel room. There are almost no lenders on the mainland that will lend on condotels any longer.
There are a couple Hawaii Banks that will consider lending on Condotels but only if the condotel unit has a full sized kitchen with a full size refrigerator, stove & oven. That basically means that the unit could be used as a permanent residence rather than solely a hotel room. If you notice, the unit you linked to is only 246 sq ft and it has no real kitchen. Just a microwave, dorm-room sized refrigerator and it might have a hot-plate. You will find no bank willing to lend on that unit.
The price in that building is low because it's a cash-only sale. Plus it has a high HOA fee. It also has no deeded parking stall. And it is just a hotel room in a hotel building.
Condotels became popular with people wanting a small vacation home that they could use, but also allow the Hotel operation to rent out the room when not used by the owner and generate income. But the hotel operations typically take 50% of the room rental. You have the cost of the unit plus the cost of the HOA. You really need to run numbers on each unit to see if they would pan out. Most don't pan out. And overtime, hotel operations kept taking a larger share of the room rental incomes, and HOA fee's increase over time. So many people flopped on the unit as an investment. And banks quit lending on them.
If the Hotel operation goes out of business then the whole building is in a bit of trouble. Why? There's no one there any longer run the hotel. Unit owners would no longer get booking for their units unless they try to start doing it themselves. The HOA reserves and monthly income flow may suffer because the Hotel operation would likely be in default on the dues they owe the association.
There are other building that were originally designed for both hotel use and actual residential use. Unit's are larger and they include a regular full-sized kitchen and maybe even a real bedroom. The Ilikai is one of those buildings. With units of 500 to 1,000 sq ft with full kitchens and actual bedrooms. The hotel operation is only about 25% of the building and the majority of units are owned by individuals as condo units. And there are some banks that will lend on the building.
Anyway, you can google condotels and see the history of how they developed, how they become popular and how they busted across the country. Particularly in area's like Florida & Las Vegas.
Anyway, I think condotel's can work fine for some people but you really need to know what you're getting into. But since most of them are just a small hotel room, it seems to make more sense to me to just book a hotel room when you visit. I'd recommend buying a slightly larger unit (500+ sq ft) with a full sized kitchen in a building that allows vacation rentals. Then you can also live in it more comfortably then just a hotel room if you want.
Fanyapint, whatever you do, don't buy any real estate until you've seen it in person AND lived in the area for awhile. You'll end up with a much more suitable place to live if you are in the area for awhile first. Considering the effort and expenses of buying a place versus renting, you'll probably save lots by renting for six months or so first to get an idea of if you even like the area. The whole state of Hawaii has very few homogeneous housing areas so you can't just decide on one area and buy a place to live there and expect it to be the same as the rest of the living spaces there. Even within one residential area, there is a lot of variation between the available living spaces. (You notice, I'm careful not to use the word "house"? Not all living spaces are houses around here.)
I've lived in hotels before and it's kinda nice to have someone else do the housekeeping! It isn't the least expensive method of living, but it's convenient. Some hotels have monthly rentals that are less than rooms by the day or week. Housekeeping will come in less often, usually, too.
I looked at the building as I have a condo next door. They were offering full hotel service for a % and a guaranteed income which off course was low. You could also manage on your own. property taxes on these are also higher than on a condo. Even at $75,000 off I don't see the value in these.
Yeah seems a pretty raw deal. Surprised such a thing existed. Shows how much our real estate market was distorted during the bubble
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, but seemed an interesting concept for discussion. I wonder if room service is included in HOA fees 
