Benefits Of Buying A Pre Construction Condo Hotel By Todd Peterson At Isnare.com Ezine Articles

As with most real estate transactions, those who get in early, get the most benefit. Once a luxury 4 and 5 star condo hotel has been completed and is fully operational, resale prices have generally appreciated in the double digits. All of this occurs in the course of only 18 to 24 months. This has happened time and time again and it’s a major reason many investors have purchased multiple premium condo hotels in the pre-construction phase.

The most common cliché regarding preconstruction real estate is “You get to secure your purchase of tomorrow’s real estate at today’s prices.” And while that statement may be passed around a little too often, it does capture the very definition of preconstruction. You do get to buy the properties of the future at present day pricing.

Your opportunity to purchase a condo hotel in the preconstruction phase is quite good. Nearly all condo hotels are sold at preconstruction. In fact, the very best condo hotels tend to sell out 100% of their inventory in the preconstruction stage. Savvy real estate investors know that preconstruction pricing can be a bargain and that the property can sell for a great deal more once it is completed and fully operational.

Some developers will space the release of their inventory over the course of two or three phases. Pricing tends to be progressively higher each phase. On some of the higher end condo hotels, you can see a price jump of 10% between phase 1 and phase 2. And, of course, the difference between phase 2 and phase 3 can be equally substantial. This is why you’ll often find the most savvy real estate investors who own several condo hotels making their purchases in the very first phase of the preconstruction development.

However, one should be very careful and incredibly selective when considering the purchase of a condo hotel. In the last few years many pseudo investors have lost money by purchasing condo hotels with the idea of turning a quick buck in mind. Not all condo hotels are the same. If the condo hotel does not have a major brand associated with it, one should be quite weary. The possibility of a Trump or a Ritz Carlton losing value is much less likely than a no name condo hotel. In fact, many real estate investors make it their number one rule of never owning a non-branded condo hotel.

In addition, if the condo hotel is being built in a region that is saturated with condo hotels, be particularly weary. This problem of saturation has afflicted the Las Vegas market in recent years and many condo hotel owners ended up purchasing a property that is worth less now than when they originally bought it. The theory of supply and demand holds true for condo hotels, as well. If there is a glut in the market place of condo hotels, you might want to think twice about purchasing.

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