Typical Costs of Purchasing a Condo Hotel Unit
Pricing varies dramatically from condo hotel to condo hotel. You'll commonly find price ranges to be between $200,000 to over 1 million. Typically, a branded condo hotel like a Ritz or a Trump will cost more than a non-branded condo hotel. Most luxury 4 and 5 star condo hotels sell at an average of $800 to $1,300 a square foot.
Some developments will sell out their inventory over the course of two or three phases. Pricing tends to be progressively higher each phase. On some of the higher end condo hotels, you can see a price jump of 10% between phase 1 and phase 2. And, of course, the difference between phase 2 and phase 3 can be equally substantial. This is why you'll often find real estate investors limit their purchases of condo hotels to the very first phase of the development.
If a particular property is having trouble selling its inventory or if the developer simply wants to move on to the next project, they might discount the properties in the final phase just to get rid of them. Be a little wary of this. Generally, it's the non-branded condo hotels that do this. It's nearly unheard of for a sought after luxury condo hotel to partake in this practice. If you do choose to buy a discounted condo hotel, you could be setting yourself up for a less than desirable outcome. One of the main reasons people buy condo hotels is because there's always the possibility of appreciation. You don't want to buy a property that is being discounted and depreciated from the moment it's sold. With that said, there are certainly times when it could be incredibly advantageous to pick up a developers discounted unit. Just use your best judgment and be sure to get some good advice.
On occasion, some developers will sell their properties at a slight discount if the buyer is going to make a bulk purchase of 10 to 30 units. This practice is desirable for all parties involved. The developer has peace of mind knowing that they can unload a significant amount of property and it helps them get closer to their sales target. The buyer, of course, gets to purchase a premium property at a discount and will realize these gains down the road when they resell them. You'll often find bulk purchases occurring in highly sought after 4 and 5 star developments. Premium properties tend to attract heavy hitting real estate investors.
By Diane Tuman
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