The Las Vegas Condo-hotel Concept Pt. II

As with any potential real estate investment, a buyer should cautiously examine contractual details, make observations, and examine facts before deciding on whether or not a Las Vegas Condo-Hotel is in line with your goals and lifestyle.

• The location of your prospective purchase should be in a desirable area. Although the condo home itself may be a well designed and luxurious unit, location is an important factor in desirability and will most certainly reflect upon the ultimate appreciation of the property.
• Is the unit located in a structure built specifically as a luxury hi-rise, or has the building been converted from a standard hotel or apartment complex into condo units?
• When was the structure built? Some older condo conversion buildings may have smaller floor plans, less desirable locations and fewer amenities, but are usually much less expensive.
• Good management and a developer of excellent reputation is a most important factor in value appreciation of the investment.
• The units themselves increase in desirability if they have spacious, well-designed floor plans, high ceilings, sizeable balconies, impressive views, top quality appliances, granite counter tops, and marble vanities.
• What amenities are available? Among the most desirable features are: a state-of-the-art security system, secured parking, 24-hour front desk, concierge services, work-out room, swimming pool (or pools,) lighted tennis court, on premises maintenance crew, card room, library, clubhouse or meeting room. Nicely landscaped grounds add to eye appeal.

Owner/management agreements generally include the following specifications:

• Amount of net (after deductions) rental revenue shared by condo owner and the management
• Condo-hotel owner responsibilities for insurance, real estate taxes, capital improvements, debt service, etc.
• Management responsibilities, including maintenance, housekeeping, administrative, front office, marketing, other operational expenses, etc.
• Rental program agreement specifying number of days annually that the unit will be available for rental purposes and notice requirements, and contingency procedures

Although it is, of course, not a requirement of purchase to rent a condo-hotel a number of times per year, or rent it at all.  Renting the unit, however, not only defrays owner costs but is profitable as well. In fact, that convenience is the primary reason, of course, that these kinds of units are purchased in the first place.

However, some come-and-go condo hotel owners may eventually decide to stay permanently. In that case, the rental agreement with management would be canceled.

In fact, a condo hotel purchase should be considered similar to investing in a second or vacation home, but with an added part-time rental feature, and hassle-free, with no maintenance or grounds keeping chores to come home to.

Feel free to give us a call at 702.376.0088 with any questions about the Las Vegas High Rise Condo market.

The Las Vegas Condo-Hotel Concept

The veritable explosion of high-rise condo construction in Las Vegas has not only dramatically altered the city’s skyline, but has considerably altered the lifestyle of many Las Vegans, and the repeat visitors to our city.

Prior to  the proliferation of hi-rise condos in Las Vegas, repeat visitors such as vacationers, businessmen and women, and high rollers would primarily check in at a hotel, motel or, depending on the reason and length of stay of the visit, rent a private home on a temporary basis.

The availability of conveniently located luxury condos convinced many of these repeat visitors that it would make economic sense to purchase a Las Vegas Condo home of their own, that in the long run would build equity, and be more cost-effective than renting a hotel room or suite and dining out for every meal.

Additionally, many investors were attracted by the offer of many of the big name luxury hotels such as the Ritz-Carlton, Sonesta, Starwood, Hilton, Trump, Four Seasons, etc. to purchase units (condo-hotel homes) that are part of the hotel structure, or luxury units built as adjacent structures to the hotel, such as Palm Towers, for example.

These condo hotels offer owners who plan to use their purchases as vacation homes, or use the condo intermittently on business trips, the opportunity to temporarily rent out their units when the owners are away.

Benefits are twofold.  The owner agrees to place the property into an organized rental program, saving the unit owner the trouble and expense of self-advertising, and rental revenue, shared with the rental program operator, allows a portion of the rental fees to be credited to the condo owner.

The operator of the rental program who shares rental fees with the owner, performs a number of services on behalf of the property, among which are marketing the unit to temporary renters as a hotel, maintains the property, supervising the front desk, overseeing housekeeping services, providing- concierge services, and food and beverage services.

Another attractive aspect of condo hotel ownership that has appealed to investors is that these units can be sold at anytime by the owner at his/her discretion.

The vacation home convenience and income potential of owning these units was an irresistible attraction to many investors who are frequent Las Vegas visitors, however, these purchases have proven just as vulnerable to the downturn in the nation’s economy as has the rest of the housing industry.

Additional information that a potential condo-hotel unit buyer should be aware of before considering this kind of investment will be covered in a follow up article, and will include such details as:

• Typical buyer/management agreements
• Guarantees –if any – offered to the buyer
• Analyzing the units for best location, amenities, etc.
• Key elements to look for when analyzing the profit potential of a condo-hotel purchase

Feel free to give us a call at 702.376.0088 with any questions about the Las Vegas High Rise Condo market.

Investing in Las Vegas Townhomes

The classification of “townhome” is often confusing to people, since townhomes offer some of the attributes of both a single-family home and a condominium. A townhome is a structure that shares, or is attached by a common wall, either a garage wall or an interior (living room) wall to an adjacent structure.

If the land occupied by the townhome is part and parcel of the deed, then the building is designated as a “townhome.” However, if the land is not the actual property of the homeowner, then the townhome is designated for insurance and tax purposes as a condominium.

Townhomes can be constructed as a single-story, duplex, or triplex. Depending on how the bylaws of the townhouse community are structured, each owner may have an additional shared ownership of the complex, which would include the common areas, parking facilities, swimming pool, recreational facilities, and clubhouse.

A governing Home Owners Association (HOA), oversees the community’s adherence to Covenants, Conditions & Restrictions (CC&Rs.) These policies dictate the legally enforceable operational guidelines that the Home Owners Association must follow and the rules homeowners are obligated to follow, inclusive of the homeowner’s obligatory monthly payment of association fees to cover the costs of landscaping, repairs, maintenance, taxes, etc., of the common areas of the community.

The townhome “lifestyle” appeals to those who enjoy close community living, freedom of the responsibility for maintenance and repair of the exterior portion of their home, easy access to recreational facilities; swimming pool, workout room, clubhouse, tennis courts, etc.

The question of whether or not a townhome is a good investment, has many pros and cons. Certainly, if the purpose of the investment is for rental or resale, the Home Owners Association guidelines assure that the unit’s exterior will be well maintained.

Appreciation is usually not quite on a par with single family residences, and in a down market, townhomes most often depreciate at a faster rate. Certainly, the age of the townhome, how well the interior has been maintained, and if the home has been upgraded, as well as the location, are important factors to consider.

It is equally important to investigate the financial condition of the Homeowners Association. An examination of the operating budget, and copies of past years budgets should be compared. Amounts allocated to the reserve fund, a current financial statement, including a balance sheet, and operating cost statement are necessary to examine as well.

Reviewing the financial statements, insurance declaration and all pertinent documents necessary to analyze the financial health of the HOA is as necessary as evaluating the townhome itself, before deciding if the potential investment is worthy of pursuit.

Shelter Realty is a Real Estate and Property Management Company specializing in the areas of Henderson, Las Vegas and North Las Vegas, NV. Feel free to give us a call at 702.376.7379 so we can answer any questions you may have.