If you plan to purchase a condotel, Miami is certainly the right place for it. In fact, few other locations can compete in terms of sheer numbers; they are very popular in this part of the world.
Condotels are a new concept to a lot of real estate investors, so you probably have a lot of questions about shopping for them. Your right to take your time, since cons can easily outweigh pros with a condotel if you pick the wrong unit.
To make sure that you maximize potential profits and minimize possible drawbacks, here is what you should look for when you are purchasing a condotel.
1. The right location.
We have already talked about how Miami is a great area in general to invest in a condotel. With its year-round sunny weather, beachside location, and array of tourist attractions, it is a popular destination in every season.
There are other aspects to consider with regards to location as well. Visitors to Miami will want to be close to the city’s shopping, entertainment and culinary hot spots. A condotel which provides easy access to these attractions may command a higher rental rate.
While some people staying in your condotel may rent a vehicle for their vacation, many may choose to rely on public transportation. You may want to consider the location of nearby bus and metro stops as well when you choose a condotel to buy.
2. Excellent amenities.
Find out what kinds of amenities are available at the resort where the condotel is located. For example, the resort might have a fitness center or gym, swimming pool, spa, and so on. Concierge services are common as well.
While these amenities can add value to a condotel, you do need to ask questions about them. Are these amenities available to anyone staying in the unit? What about you, if you are in town but not staying in the unit? Is there any extra fee to use them? What are their hours?
3. Reasonable fees.
Speaking of fees, this is what typically makes it expensive to own a condotel. Maintenance fees can add up. In most cases, you can expect to be paying anywhere from $1-$1.50 in maintenance fees for every square foot of condotel property you own. These fees are typically charged every month.
While fees may run higher in some cases, that does not necessarily mean that they are not fair and reasonable. It all depends on the value and demand for the property as well as the split on rental income (more on that soon).
4. Pre-construction deals.
Obviously, it is easiest to make an informed decision about a condotel which is already fully constructed and ready to be lived in or rented out. But it is possible to shop for a condotel which is still under construction or which is simply proposed for construction.
The benefit of doing that is that you may get a better price. It is a riskier buy, and the seller is aware of this. As such, they may be willing to cut you a deal. In some cases, it may be worth it. You will need to decide for yourself what risks you are comfortable taking.
5. A fair split on rental income.
After you buy a condotel, you will profit from the rental income if you decide not to inhabit it yourself. You are not responsible for the associated marketing efforts—these will be undertaken by the resort.
Because of this, and because so much of the condotel unit’s value is tied to the entire resort, the resort’s developer will take a portion of the rental income each month. This split could be even, or it could favor the developer or you—it all depends what you agree on.
It is of course great to enjoy a larger cut, but typically you will pay for this through higher maintenance fees. You will need to do the math to determine what kind of split will be most beneficial to you.
6. A great condotel mortgage lender.
Finally, a successful condotel purchase relies on you not only to choose the right unit, but also the right lender. A lender or broker which does not typically deal in condotel loans in Miami may be unaware of all the issues and considerations which need to be weighed when shopping for one and applying for financing. One which specializes in them can make useful suggestions and connect you with a competitive condotel loan.
We Can Help You Apply for a Miami Condotel Loan
Lending Bankers Mortgage has extensive experience with Miami condotel loans and can connect you with financing that will help you to achieve your real estate investment goals. Please give us a call today at (786) 220-1100 or email firstname.lastname@example.org to begin.