Guide to Purchasing a Costa Rica Condo-Hotel Property – Part 2
Part 1 mainly dealt with explaining what this guide is about and laid out an outline of what to expect in the coming sections. You can read it here if you missed it.
Part 2 of the Guide to Purchasing a Costa Rica Condo Hotel is a brief description of what is the concept behind a condo-hotel.
What is the concept of a Condo Hotel?
The basic concept of a condo-hotel is the private ownership of individual units which collectively is managed as a hotel. Condo-hotel agreements vary but the basics are you own the unit or condo and when the managing hotel sells the room, you earn a commission or share in the profits. Large professional hotel management companies are the most successful users of this business model because they know hospitality and the logistics of servicing units which a hotel requires.
If managed correctly, the owner earns rental revenue which can augment the loan payment. An example, of a professional hotel management company would be Wyndham Worldwide. From the consumers point of view, they likely will not know their rented unit is privately owned unless the developer is still actively selling the units. Typically, condo hotels are in the luxury market and demand prices that normal hotel suites could not compete with.
In summary, from the buyers perspective a condo hotel offers the ability to buy into a larger value property because of the rental revenue sharing. This type of unit is truly a mixed investment; leisure and revenue generation. Unless, you are amongst the top tier of incomes of the world, earning income on your property investment when the unit is vacant is a sound business decision.
The condo hotel business model offers individual buyers to earn monthly revenue plus still earn appreciation in the property value of their investment. For developers, the condo hotel business model allows them to recoup their investment faster and begin earning a profit much earlier compared to the typical hotel development.
Check back with us for the next part of this guide: How would I benefit purchasing a Costa Rica property using the condo hotel business model?
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