First time condotel buyer? Here are the tips you should bear in mind when you’re buying your first condohotel.

Research the real-estate market

This includes whether the prices are on the rise or has the real-estate market peaked. You should check the real estate market of your target location so that you can be sure whether the price offered to you is just right, too high or if you’re having a bargain.

Study regional tourist activity and hotel occupancy

Since a condotel unit, especially if it is run by a hotel operator, may be marketed like a hotel room. The location of your unit has the potential of figuring prominently into how profitable an investment it is. Jerry Yeiter, past president of The National Real Estate Investors Association and president of Yeiter & Co., an accounting firm in Houston, says some investors have had success with condotels in Florida and Arizona because these destinations offer desirable tourist activities and because these buyers purchased at a time when area real-estate prices were appreciating.

Know when’s the best time to buy a condohotel

If you buy before a condotel project is fully built, you may be able to purchase your unit at a lower cost, as developers tend to offer the lowest prices pre-construction. You may have to wait until the project is completed, though, before you can rent out your unit.

When you buy a condohotel that is already built, you can expect that it will be even more costly because naturally, the developers would also want to get their investment back as soon as possible. But, it also means that you can already rent it out your unit as soon as you’ve paid for it.

The bottom line here is that you should be able to estimate how much you can fetch per night and how often you need to rent the unit out to bring in enough to cover your mortgage and other expenses. “It’s all about the numbers,” Mr. Yeiter says. “You’d have to look at the rules and make sure the property would be suitable for an investor.” Some management companies, for example, stipulate how often you must make your place available and even how it should be decorated.

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