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The standard pitch is that after you put down a couple of hundred thousand you can stay at your condohotel room a couple of times a year for free.
that is it. Any possible value increase would be driven by appreciation. And that could happen and be reasonable...After a while people decide it is cool to own a unit at Signature or Veer or Trump and you make some money.
Operationally hopeless. You make money only if the operating institution lets you. They simply manipulate the fees for the desired outcome.
One does not talk about Condohotels as Investments. Higher class time shares pretty much.
If you want testimony to how this all works the Las Vegas Sands is sitting on an erected building of condos that could go either way. But after almost 10 years has not put up the cash it complete the building.
Disgusting post. Condotels are real RealEstate, timeshare s are WELL timeshares....................lol.
What i dont get is that some think @ todays prices the Ala Moana Hotel condotel is something they can make money on. Only thing they got is speculative appreciation-speculation means MAYBE. Their HOA fees are outrageous. Same goes for $800 plus fees @ Waikiki Marina studio unit.
AHH_las Vegas. if one paid $550,000 for a Mgm studio you be crying now, however if you paid $130,000 for the same unit youd be crying with joy!
Last edited by ChinkChink; 09-03-2016 at 09:12 PM..
EVASIVE! Show me the math! I'm not the one making silly statements and then trying to cover up my ignorance. Com'on, this is your chance to shine!
Well, since you're so eager and willing to learn, I'll teach you...
$900K 400 SF standard view studio with NO parking
$350/night (avg high and low seasons after discounts, incentives and processing fees) x 30 = $10,500/mo
$10,500 x 70% occupancy = $7,350
$7,350 x 13.75% TAT and GET = $1,010
Gross income after state taxes (NOT income tax) - $6,340
$6,340 x 60% management fee = $3,804
Net after mgmt fee - $2,536
FF&E (to Ritz) - $200
Net after mgmt fee and FF&E - $2,336
That's a 0.2% cap. LOL. Since you're math challenged, I should note that you need to move the decimal over a notch to get to 2%... so it is one tenth of a 2% cap rate. There are other fees that Ritz will hit you with I'm sure and the rate will realistically go to zero or negative. The FF&E is extremely conservative at $200... and repairs of $1,200/year for an ultra luxe product is completely pie in the sky.
Now that I provided real-world numbers, it's your turn to provide your misleading and fabricated realtor numbers.
Don't forget to research what a cap rate is before posting.
Geez pj737 you still haven't supported your two statements. I hate when internet "know it alls" get caught and think they can bluff their way through.
Be a man and step up and provide the calculations or admit that you CAN"T.
Then I can teach YOU about cap rates since I am certified by the state of California to testify as an expert witness on valuations. Hint, that includes cap rates.
But only if you want to learn.
Well, since you're so eager and willing to learn, I'll teach you...
$900K 400 SF standard view studio with NO parking
$350/night (avg high and low seasons after discounts, incentives and processing fees) x 30 = $10,500/mo
$10,500 x 70% occupancy = $7,350
$7,350 x 13.75% TAT and GET = $1,010
Gross income after state taxes (NOT income tax) - $6,340
$6,340 x 60% management fee = $3,804
Net after mgmt fee - $2,536
FF&E (to Ritz) - $200
Net after mgmt fee and FF&E - $2,336
That's a 0.2% cap. LOL. Since you're math challenged, I should note that you need to move the decimal over a notch to get to 2%... so it is one tenth of a 2% cap rate. There are other fees that Ritz will hit you with I'm sure and the rate will realistically go to zero or negative. The FF&E is extremely conservative at $200... and repairs of $1,200/year for an ultra luxe product is completely pie in the sky.
Your turn.
I actually like the arguing here as I'm learning a lot.
Here's my feedback. Trump units earn 1.5% to 2.5% CAP in the rental program if you pick good units and I consider that to be a direct comparable to the Ritz. 70% occupancy is low for a branded hotel right now unless you buy a near bottom floor unit (investors should be aware of this), TAT & GET are added on to that avg daily rate, not netted out, 60% management fee is in my opinion completely unheard of (but if that's really the Ritz rate that is very bad ... I'm going to be skeptical of this until I see documentation since Irongate developed both projects), and your electricity rate is too high for a modern hotel unless you are running some incredibly inefficient window AC unit in an old unit with no insulation. Last I checked it was about 120 or so for a studio sized unit. Repairs come out of FF&E so you can't double count that.
I have seen near zero cap rates, but those tend to be on the near bottom floor / no view units and in my opinion anyone who buys into that should have an inkling the room won't get booked out that much.
Last edited by LostVector; 09-03-2016 at 10:40 PM..
I actually like the arguing here as I'm learning a lot.
I have seen near zero cap rates, but those tend to be on the near bottom floor units and in my opinion anyone who buys into that should have an inkling the room won't get booked out that much.
Actually all similar units should have the same cap rate. Their valuations will be different though because they have a lower NOI.
LostVector Cap rates are a valuation tool. They are not a profit metric.
Also there are no uses for cap rates on condos and SFR's. You look ignorant trying to use them in those asset classes.
Disgusting post. Condotels are real RealEstate, timeshare s are WELL timeshares....................lol.
What i dont get is that some think @ todays prices the Ala Moana Hotel condotel is something they can make money on. Only thing they got is speculative appreciation-speculation means MAYBE. Their HOA fees are outrageous. Same goes for $800 plus fees @ Waikiki Marina studio unit.
AHH_las Vegas. if one paid $550,000 for a Mgm studio you be crying now, however if you paid $130,000 for the same unit youd be crying with joy!
This is quite irrational. You control neither occupancy rates or the operational costs.
Things get slow the last things leased are the condohotels. Things get good you up the fees and the oerations cost.
Basically a sucker bet...just like a time share...which can also be real Real Estate.
LostVector Cap rates are a valuation tool. They are not a profit metric.
Also there are no uses for cap rates on condos and SFR's. You look ignorant trying to use them in those asset classes.
I use cap rate on these condo hotel rooms all the time to understand how much I'm sacrificing in safe return just to have a nice place to stay or in the hopes of future appreciation. After all, I could just put it in an index fund or a mix of safe dividend stocks, etc. How is that ignorant?
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