Among the industries most affected by the pandemic by coronavirus is he tourisma sector that after two years of crisis seems to come out on top and, therefore, generates expectations. This is why many people, with the aim of reviving their economy and in search of profit, try to enter the business to to invest.
And this is when the term condo hotel begins to resonate among investment trends. “The condo hotels are the way in which small and medium savers can participate in the tourism business by financing the development of new hotel ventures and getting an income from it. In this case, the investor owns a part of the hotel and obtains a profit from its exploitation”, Daniel Bryn, a specialist in real estate business and founder of Inversiónre Real Estate.
It should be noted that these operations can be done with Hotels located both in Argentina and abroad. In fact, Argentine investors are consolidated as the main buyers of condo hotels in Miami.
It’s just that, according to the Miami Real Estate Agents Association, Argentines ranked first in total international real estate transactions in South Florida with 13%, reaching investments of 900 million dollars between August 2020 and July 2021.
In any case, investing in Argentina is not the same as investing abroad, since the returns are different, as will the tax impact on profits. Therefore, it is always necessary to make the investment with specialized advice.
The term condo hotel begins to resonate among investment trends
How the condo hotel business works
According to Bryn, there are two types of systems with which you can operate in this business model.
On the one hand, rooms with deeds are sold under the horizontal property regime and these are operated by a hotel chain that manages the enterprise. The investor will have a proportional rent for his room over the total number of rooms used, subtracting the operator’s expenses.
The other operation consists in the formation of a escrow of which quotas-parts are subscribed that allow the investor to have a participation in the enterprise.
“This model is similar to having a shareholding in a company and entitles you to the same share of profit sharing, which can be monthly, quarterly or annually.“, details the specialist and adds that, in some cases, the investor can obtain the benefit of using the hotel facilities during some period of the year.
How many dollars should be invested in condo hotels
Now, many wonder how much money must invest in the operation to be able to enter the business and, above all, how much is estimated to be the gain.
Currently the values of a room are around 85,000 to 150,000 dollars
Asked about these specific concepts, Daniel Bryn explains that the investment depends largely on the property qualitythe number of stars of the hotel and, like any property, the location.
“It is also key who will be responsible for the management and administration of the project. If the project is operated by an international chain, the price will be higher,” he explains, adding that currently the values of a room are around 85,000 to 150,000 dollars.
As for profit, the specialist says that in condo hotels Between two and four stars, the average return internationally is between 7% and 12% per year.
While, if it is a local undertaking with a reasonable level of occupation, the cost effectiveness should be between 7% and 8%.
It is important to highlight that in the five star hotels the annual return is lower. However, there is a strong gain from the appreciation of the property over time.
Argentines ranked first in total international real estate transactions in South Florida
Is it a good deal for a first time investor?
Provided that the person is informed and advised by a specialist in the sector, the investment in a condo hotel does not require previous experience.
Nor is it estimated that the person investor you deal daily with the business, that is, you will not have to manage it. In fact, not worrying is one of the main advantages.
“It is very different from buying a property for a traditional or temporary rental. Investing in a property operated by an expert company in the sector is a good alternative to start investing,” admits Bryn.