How to Make Money Investing in Condotels

Client earns 17% instant equity plus 7% annual net return on condo rentals.
 
If you’re looking for resort real estate with positive cash flow, worry-free management and good potential appreciation, consider a condotel.

 

Here in Myrtle Beach, our oceanfront is lined with condo projects run like resort hotels. They have front desks, maid service, on-site restaurants, spas, pools, lazy rivers, tiki bars –- everything a tourist or holiday-maker wants from a vacation hotel.

 

Right now, you can buy these coastline condotel units through any Realtor at up to 55% off their pre-recession prices and in many cases realize a 5% to 7% positive cash flow.

 

Beware Developer Closeout Inventory

 

One of my clients just bought an upscale oceanfront condo at foreclosure auction, and he netted $37,800 (17%) instant equity plus he’s earning 7% positive cash flow every year. Here’s the breakdown:

 

Foreclosure Auction Purchase Example

Foreclosure Condotel Example

Caveats:

 

1) You won’t get a positive cash flow with a mortgage. This only works for cash buyers.

 

2) If you do want financing, only a select few lenders will finance condotels, and the terms are not as favorable as second-home condo loans.

 

3) If you’re buying at foreclosure auction:

a) Make sure the plaintiff is the senior lien holder

b) Junior liens and outstanding HOA dues are wiped clean

c) You’re responsible for any unpaid taxes

 

4) All condotels are not the same. Some operate more efficiently than others. Some have better occupancy rates. Some have lower HOA dues. A good Realtor should be able to help you analyze the numbers.

 
Posted May 28, 2013

By Kay Van Hoesen

Email: kay@certifaxappraisals.com

Phone: 843-497-9155, Ext. 103
 

Kay Van Hoesen

Kay Van Hoesen (Certified Appraiser, Realtor and Broker) represents private-party investors, private equity groups, and hedge funds at foreclosure auctions. She consults with mortgage lenders and individuals needing real estate advice in Myrtle Beach and the Grand Strand.
 
Kay is founder, senior appraiser, broker-in-charge and owner of Certifax, Inc., in Myrtle Beach. With local appraisal experience since 1986, she and her staff have developed more than 35,000 appraisals, consulting on more than $7 Billion in local real estate.
 
Kay is a state certified residential real estate appraiser in both South Carolina and North Carolina as well as FHA-approved. Additionally, she is a Realtor and licensed real estate broker in South Carolina, a participating member of the National Association of Realtors, the Coastal Carolinas Association of Realtors, and an Associate Member of the Appraisal Institute.
 

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Every month Kay Van Hoesen identifies underpriced real estate opportunities for investor buyers.

 

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