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Condo hotels a bad idea?

By December 13, 2006

Uncategorized

Forbes takes a look at the condo hotel trend, A Room Of Your Own and finds that it might not be all that it is cracked up to be:

Kearney bought his room at the W Las Vegas for $493,000 (his broker got him in before units went on sale to the public for $650,000). If he snags a five-year interest-only loan, common for condo-hotels, he’ll pay $23,664 yearly. Once the hotel is built, he must shell out for a condo fee ($6,000), insurance ($250), a furniture replacement fund (5% of gross rentals) and taxes ($4,930). Then add $40 for maid service each day it is rented. Now assume the room is full 75% of the year, at $270 per night. He collects just 55% of rental income, or $37,000. Result: He’ll be $12,500 a year in the hole.

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