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Daily Real Estate News | September 1, 2004
'Condotels' Let Investors Mix Business and Pleasure
One of the emerging trends in the real estate industry is the condominium hotel, also known as a "condotel," which combines vacation-home ownership and real estate investing.
Condotels typically are higher-end furnished units found in resorts, hotels, or condominium buildings. The upside of this investment is that the owner gets not only a vacation home but also a mortgage-interest deduction if there is a mortgage, regular rental income, and an equity interest in the complex where the unit is located.
But investors must be prepared for the costs of investing in these properties, including the acquisition price and financing, which may be more expensive than residential property since the real estate will be considered investment property; higher income taxes; insurance; and the usual condo-association fees, rental-management fees, and other expenses.
Source: Wall Street Journal (09/01/04); Smith, Ray A.
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