Condo-Hotels in South Florida: Yay or Nay?

Question

Greetings all, I'm looking at pulling the trigger on my two first deals. Been analyzing a crazy amount of deals and it seems that condo-hotels in the Miami-Hollywood-Fort Lauderdale area provide a nice return, even at very low levels of occupancy. I put a 40% assumption. Anybody using this investment method and finding success? Or the opposite? Thank you all!

Kevin Pillow · Answer

It’s a big shock to a lot of investors that want to use the 10% down FHA Second home loan program. But that’s why realtors who focus on investors need to have lenders in their network with non QM loan products.

Chris Mury · Answer

@Kevin Pillow

Great point. OP should also be aware that most condotels are non-warrantable making seller financing and cash your most likely purchase options.

Account Closed · Answer

My wife loves Destin so I was doing the same thing there. In Destin, I found that it would be amazing, but the difference is between the condo fees, assessements, etc that can kill cash flow. It's a little different for me - ie something for the family that cash flows less could be forgiven - so that would be the variable I'd for sure dig into in your area and what exactly they cover as part of their fees (maintenance, internet, water, etc). As an agent I'm sure you've thought of that, but that was the bit that surprised me about condos as I dug in.

Kevin Pillow · Answer

Great area for vacationers and it can definitely work. Make sure the on-site management allows you to self manage.

Andrew B. · Answer

I would never consider a condo-hotel as an investment. You give up all control over the asset and have no control over the property management company. When units are rented out, you have no way to push more traffic towards your unit, and I would always be suspicious that they were renting it out more days than they were telling me. I must say that I am biased as my parents bought one (sold it after market crash and it still hasn't recovered from the 2010 timeframe)

Karine Kuchipudi · Answer

Yes, all good points. Thank you for the input Jacob!

Condo-Hotels in South Florida: Yay or Nay?

Condo-Hotels in South Florida: Yay or Nay?

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