If you don’t want (or can’t afford) to buy a timeshare or fractional share property, there is now another way to spend your vacation that doesn’t involve staying at the local Best Western or Comfort Inn.

These properties are called “condo hotels”.

A condo hotel isn’t just a property that includes both a condominium complex and a hotel complex. So, for example, the new Mandarin Oriental under construction in Boston’s Back Bay will not be a “condo-hotel” (or “condotel” as they are sometimes called). There, 50 owners will live in their residences, full-time, while nearby, hundreds of people stay in the attached hotel (sorry, “ultra-luxury hotel”), and ne’er the two shall meet (at least if the homeowners have their way … ).

A condo hotel, in contrast, is where you buy a condominium, usually as a second and/or vacation home, and you own it, totally, outright – you get a deed to it.

But, you have the option to rent it out, for any of the time you aren’t living there.

(In fact, some programs require you to be away from your property for a certain number of days – basically so that you don’t end up using the condo hotel as your primary residence. Donald Trump’s SoHo condo hotel is the most well-known example of this – he says he’s building a hotel, but local residents fear he’s just building residential condos, and the neighborhood is zoned only for industrial or commercial uses. Details, here.)

As I mentioned, many times the condo hotel complex will be attached to a regular hotel. For example, Ritz Carlton has several of these types of properties, in Jupiter, Florida and St Thomas, US Virgin Islands, specifically. There are regular Ritz hotel suites, and also condos. Vacationers looking for a place to stay could book a room at the regular Ritz, or they could try to find a room in the condo hotel section.

The reason a vacationer would want to stay in the condo hotel instead of the regular hotel is that often-times, the quality of the home is much better than the hotel rooms across the complex. And, they can be larger, and they are probably fully-furnished.

It can be a little confusing, but it’s important to make the distinction.

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Updated: 1st Q 2018

At first, you’d only see these types of properties in popular vacation destinations, which made sense since many owners wouldn’t want to be there full-time, and there was a pool of visitors looking to rent. Now, condo hotels are sprouting up, all over the place.

If you are looking to buy in a condo hotel project, it is important to understand that this should not be considered an investment property – there is very little chance you’ll make back in rents what you’re paying on your mortgage loan.

Instead, consider the revenue as a way to defray your annual expense.

Also, the resale market has not yet been proven. Not everyone would want to buy in a development of this sort. As well, these new condo hotels are going up in “less than prime” locations, which are more likely to suffer, in any economic downturn.

More: For a Condo Hotel, Try South Beach Bend – By Charles Passy, The New York Times

Also: Condo Hotel Center – all about condo hotels

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