Real Estate Tips: Investing in Condotels - a Different Type of Rental Property

Condotels are not very well known or understood. It is basically a Condo Hotel, where you purchase a room in a 4 or 5 star hotel. The hotel then rents the room out for you. You also have the option of using it yourself as a nice vacation get away.

An advantage of Condohotel investing is that you do not have to take care of the tenants yourself. Through an agreement with the hotel, the guests of your unit will receive all the hotel's services including room service and housekeeping. The hotel guest will not even be aware that you own the unit.

Another benefit in owning this type of rental property is the ability to use a brand name such as "Trump" or some other well known hotel chain that will promote and find nightly tenants for you.

If you give the hotel enough notice they will also be able to make sure your room is vacant and available for your personal use whenever you want to visit.

There are some disadvantages in having a Condotel as an investment. Since the guests are usually only there for a few days to a week at a time, there is a high turn over and likely to be more vacancies than if you had a home or apartments with long-term lease tenants. You are also likely to have more vacancies in the off season when the resort area of the hotel is not so popular.

Condotels are a great rental investment/ vacation home hybrid and leave you without the stresses of being a landlord.

You can usually find financing on your Condotel with about a 20% down payment. Costs for units range from $100,000 to $800,000 depending on location and hotel. You can choose to buy an already built unit or get involved in a pre-construction deal.

The advantage of getting in early on a pre-construction is that you can benefit from any appreciation while it is being constructed. Don't fall into the trap of buying pre-construction deals for the purpose of flipping them before closing, this is not true investing, it is simply speculation.

Location means everything when it comes to investing in a Condotel. You want a great resort area that will attract a lot of tourists to fill your vacancy.