Are the Condo Hotels in Miami Beach good investments? (Fort Lauderdale: apartment, renter)

[WestGuest]

They have Condo Hotels in Las Vegas but almost no return. What about in Miami and Miami Beach?

[bale002]

Generally speaking, for the average person, no.

I haven't priced this sector of Dade County and that particular niche, but most likely, under "normal" market conditions, with any sort of loan, cash flow will be basically zero or negative. Even with an all-cash purchase, yield (or cap rate), assuming a newish building, could be around 3%, after condo fees, property taxes, content and liability insurance, and agent commissions, and not including any maintenance, repairs or special assessments, and any income taxes, so yield could even be lower, so about similar to 10Y-30Y government bonds, and maybe even less in risk-adjusted terms.

At the same time, special conditions apply to condo hotels, namely short-term rates, occupancy and vacancy rates, inventory taxes and hotel taxes.

On the upside, short-term rates annualized would be much higher than for long-term residential rentals. But what about vacancy rates annually? On the downside, in Florida there is an inventory tax that would apply to any furniture, possibly also to fixtures and appliances, above $25,000 in value. Moreover, any rental or lease less than six months in duration is subject to hotel tax, though that could be absorbed by rental rates.

So the question is, what rate of occupancy, and at what rental rate, is necessary to more than offset all expenses to generate a decent yield? That's a market study question that probably only relatively few specialists can answer.


As for capital value, it could keep pace with inflation, provided that the neighborhood remains solid and the building well maintained.

Otherwise, such investments usually generate outsized returns only when acquired at prices that are well below long-term value, e.g. in the aftermath of a speculative bubble gone bust and/or from a distressed seller.

Good Luck!

[bmw335xi]

Originally Posted by WestGuest

They have Condo Hotels in Las Vegas but almost no return. What about in Miami and Miami Beach?

Condo hotels are sucker investments

[Majami]

I won't speak to Condo Hotels, I will say I used to rent out a townhouse (now I AirBNB it), and while I rented it out, my return was just under 1k a month. The rest of the 1k I just kept inside the LLC for tax purposes (didn't want it taxed at my rate), and I would use it for maintenance and repairs. But I budgeted in such a way for maintenance that I almost always made money and never had to dip into that profit. In their contract, I would write in a 300$ move-out fee which I would take out their deposit, however I had deal with some Russians who would do a thorough clean for 150$. If there was damage, I would further withhold it from their deposit. Now that I AirBNB my returns are even higher. So if you have patience, you can just buy several townhouses, or some units sell that are entire apartment buildings for a steal (like 2-5 million for as many as 5-7 units) so look out for those.

TBH, most of the properties here are owned by investors and seasonal residents. I know many of them.

[blueherons]

I've sold a few condotels to my Canadian clients and it is a good deal for them.

It is mostly a break even process.

I've sold: Ritz Carlton, The W, The Hilton, and The Atlantic up here in Fort Lauderdale.

[terridhi]

No, it's not. In my opinion, any condo is not good investment, the HOA fee will kill you. The HOA in FL sucks big time. Don't use your usual HOA experience on Miami Dade area, they are so bad.

[Majami]

Originally Posted by terridhi

No, it's not. In my opinion, any condo is not good investment, the HOA fee will kill you. The HOA in FL sucks big time. Don't use your usual HOA experience on Miami Dade area, they are so bad.

The HOA fees get passed to the renter and are about 0.5-1$ per sqfoot (good average for most middle of the road properties in South Beach though they vary). No need to worry about them, the rental market is *that* strong.

[hurricaneMan1992]

Nowadays, why not a regular condo and get a good property manager? The rental market is INSANE nowadays!

[AnnRyan]

As an investment, you're better off getting a regular condo and renting it out, and using the profits to fund your vacations. My parents bought a time-share in the 1970s... a nice one, and it worked for our family, but most people really got a really bad deal on those.

[WestGuest]

Thanks the last two posters claim its better to buy a condo and renting it out when not using it. I may try a management company - some like Azure have pretty good ratings.

I'm basically happy having a place to visit and a very small profit.