We Bought a Hotel Room (and Now We Live In It!)

by J. Money - Published October 28, 2016

condotel living

[I am sooo excited to share this with y’all today!! I recently found out that Amnesty from Primal-Prosperity.com not only lives in a hotel, but also OWNS the room herself (!!), and has graciously agreed to share the details with us… Thank you, Amnesty! Finally a home I’d be willing to buy! ;)]

Yup, you read that correctly – we own a hotel room.

About six months ago my husband and I purchased, and moved into, a fully furnished King size hotel room suite in a historic building, with kitchenette and all.

condotel kitchenette

They call this a condotel.

Before we get to that, though, let me first clarify that I could write multiple articles on tiny space living alone. I’m a minimalist, and have wanted to live tiny for a long time now. But, let’s face it, tiny house living is no longer unusual and there are already tons of articles and resources regarding tiny living.

So today I will specifically talk about the personal, and financial aspects, of a hotel room vs it’s similar studio condo.

I will not get into specifics about the challenges and benefits of tiny living, or condo living versus single family home living. And, if you are not prone to living in a tiny space or even high density living (i.e. have a family, like to entertain, or want a yard), then living in a condotel is not for you.

condotel main room

However, if you are a real estate investor, this is a great option. It can also always serve as a vacation home, weekend home or a retirement home after the nest is empty.

Since this is a money blog, we’ll start with the juicy details of the finances first…

The Personal Finances of Owning a Hotel Room

I am a real estate investor first, homeowner second. So, my properties all serve the purpose of making me money first, then provide a home base second. We bought this condo in a very happening, upscale urban area, with bike paths and parks galore for $41,000.

Yup, $41,000.

We made a cash offer and paid half with our own cash, while financing the remainder. It’s since been paid off in full, free and clear. We also pay about $425 every month to the hotel, ALL inclusive. This covers gym, heat, electricity, water, trash, HOAs, high speed internet and cable, including about 600 channels with a full sports package and all the movie channels.

Our taxes are about $1,400 per year, and we buy homeowner’s insurance for $120 per year. Street parking is free to full time residents. So, amortizing those costs, our TOTAL housing costs are $550 per month. That’s it. Oh, and did I mention it is on the lakefront?

Investor Finances of Owning a Hotel Room

The unit had been on the market for awhile because it was overpriced at $55k. Then it dropped to $49k and entered my radar, because it was now within the range of where we could make a cash offer.

I performed a comp search with my Realtor first and foremost, and I was happy to see that the units do move on the market. That was a good sign since I was originally skittish about the whole ‘condotel’ investment. I then saw that the non-remodeled unit comps placed this property at a value of around $43k. So, we negotiated a couple of times and ended up on $41k because one of the windows is inoperable and there is no A/C, so that leaves us $2k to cover those costs down the road.

In addition to doing my due diligence for the purchase price, I also had to figure out if this would even cash flow down the line.

We have two options for this. Our first option is that we can rent the unit out ourselves, “as-is”, on AirBNB, or we can get a more long term tenant. If we get a long term tenant, we can probably get close to $800 per month, which will mean a cash flow of only $250 per month. Not great at only about a 7% ROI, but since this is our main residence, it is not bad to have the option of temporary rental income.

Our second option is that we can put it into the hotel “pool”. This is where it gets tricky because the hotel needs to keep certain standards, so we would need to put more money into it. At a minimum, we would need to replace the window and A/C mentioned earlier for $2k, and buy a furniture package from the hotel for $3k. Otherwise, the hotel won’t rent it out for us.

That brings us to an equivalent of a $46k total investment purchase price to get it into the hotel pool. From there, there are three tiers of rentals. The hotel takes 30% of rents and requires a 2 year lease, which we can break on certain conditions.

  • Tier 4 These units are not accepted into the hotel pool because they either don’t have the $3k package furniture, or the unit is in too bad of shape to meet the hotel standards.
  • Tier 3 These are usually clean, but outdated units. With the furniture package, the hotel will rent these units, but they will be the last units rented, so they will only be rented during high season. This will bring in an average yearly rental of $9k. After taking off 30%, we would be pushing it to break even. This is where our current condo stands.
  • Tier 2 These are units that are more updated than tier 3, but not fully remodeled. It would probably be about another $4-5k to do minor upgrades like flooring, painting, fixtures and appliances. This puts us around $50k or so as a total investment purchase price. Yearly rents average $18k for these, so we would cash flow around $500 per month. Not bad at a 12% ROI.
  • Tier 1 These units are rented out first and must be remodeled to the hotel standards. The remodeling for our unit, as done by the hotel, costs $11k. This would put us at a $57k investment purchase price. Yearly rents average $22k-$23k, so we would cash flow around $750 per month, putting us close to a 16% ROI. Pretty darn good!

Our goal for the short term is to not put any money into the unit, and rent it out the best we can while we do 2-3 month travel trips and then come back home for awhile. We can use it to home swap around the world also, and you can read below about our philanthropic dreams.

In the long term, when (or if) we move out permanently, we will probably go for the Tier 1 option and the 2 year lease, to maximize our ROI.

Fun Facts: About 50 units are owner occupied, another 50 are rented out to long term tenants and 80 units are in the hotel pool. They also have larger 1 and 2 bedroom units that people live in, but they are pricier (up to $200k for the penthouse).

Benefit of Condotel Living #1: Travel

I am a free-spirit and a vagabond, so this is where the hotel benefits me rather than a condo.

Condos can usually be rented, but sometimes not. If they can be rented, there may be an HOA requirement for a minimum of a one year lease. Plus, most tenants don’t want furnished condos, they want to bring their own stuff. So, if you want to rent out a condo for extended travel, you may have to put everything into storage.

However, with a hotel, it is set up perfectly to travel for a few months and rent it out nightly, or for longer corporate stays, and make money while on the road. All of which is our intent in the near future. When we decide to do this, we will put all our belongings into the small closet and install a dead bolt lock on the door and leave the large walk in closet and dresser drawers for the guests. Linens will be available for guest use also.

I know a lot of people would still be weary about having strangers around their stuff. But I’m a minimalist by nature and not all that attached to my stuff. We have a very small fire rated/flood proof, lockable safe for important documents that we would leave in the locked closet. Then, when we are done traveling, we can come right back to a place with furniture, dishes, linens and our own stuff!

Benefit of Condotel Living #2: Cleaning

condotel bedroom living room

Like any tiny dwelling, it is a snap to clean. However, I still don’t like certain tasks like scrubbing floors and shower stalls. So, (cover your ears, MMM) we pay for cleaning services once every few months. It is nice because the cleaning crew is right there in the building and we can usually request cleaning at almost a moment’s notice.

[Out of curiosity, obviously not financial acumen, I did ask the hotel if there was a ‘package’ available where we could use their sheets and towels and get weekly or bi-weekly cleaning to change the bed and bathroom linens. It turns out that they don’t do this for tenants who reside here permanently. So, alas, we are left to change, launder and store our own linens… and no pillow mints. Woe is us. :)]

Benefit of Condotel Living #3: Visitors

Putting up overnight guests in most tiny living situations is challenging. However, in a hotel, they can stay right next door!

While obviously that means shelling out dough occasionally (at least if you want to be generous), it is usually still a heck of a lot cheaper than the year long expenses you’d accrue from owning or renting a multi-bedroom, stand-alone house, especially if you live in an urban area. Though many guests when visiting from out of town will pay for their own hotel rooms anyway, making this a great way to be close to your visitors instead of a car ride away… And you get to keep your privacy!

Benefit of Condotel Living #4: Socializing

This is a prime building for corporate stays because of the kitchenettes and location. In the summer it is packed with out-of-towners and tourists. While many people may find this annoying, we are very social and love talking to new people. Every elevator ride is an opportunity for a fun conversation.

I also love telling people that (supposedly) the building is haunted and watching their expressions. :)

[I’m not sure if I believe in ghosts or not, but while living here one really weird thing happened. I was in the bathroom brushing my teeth and the lights just went out all of a sudden. It wasn’t a power outage, and the switch had actually moved to the down, ‘off’ position! That was really eerie because it doesn’t toggle easily, nor was it loose. But so far that is the only thing I have experienced here.]

Benefit of Condotel Living #5: Amenities

Some condos have these same amenities, but they are usually in pricier buildings. Our building has a full service spa with massage, hair cut/color, makeup, facials, etc… It also has a gym, tailor and a restaurant/bar. This makes winter living more enjoyable. There is also 24 hour concierge and everyone is super friendly.

The only thing it is missing, in my opinion, is a coffee shop, but there are plenty others in the area within a few blocks walking distance. It would also be nice to have a pool, or even just a public lounge or exterior space to hang out in and be social. But, again, that would probably hike up costs to the owners, and there is a huge park literally across the street.

J. Money asked me if we end up spending more money since we have all these amenities?

Fortunately we have good self control to not get lured into the restaurant and bar too often, but it is nice to know it is there and they do have good weekly specials and friendly people. I enjoy having the salon so close for my highlights, but I cut my own hair, so the costs don’t add up too much. I do, however, plan to spend more money at the spa in the winter getting massages when it is too cold to enjoy the outdoors. :)

Another Cool Use For Your Condotel…

We live near a major hospital and when we travel, we would like to occasionally offer out our room for free to people who might be visiting for an illness or a sick child. This is much harder to do with traditional real estate investing!

Condotels & Pets?

Like many high density buildings, dogs are not allowed, but cats are. I have to say that I was surprised to hear that cats are allowed in a hotel building. Pretty cool. We want to travel though, so no cats in the near future for us.

So, that’s it!

What do you think? Have you ever thought of living, or investing, into a hotel condo before? Does it make you want to cringe? :)

Drop any questions below, and I’ll happily answer them.

********
Amnesty blogs at Primal-Prosperity.com, where she describes herself as “FIRE’d up, wild and free”. She has developed a workshop program called The Real World M.B.A.: Creating a Life of Meaning, Balance and Abundance which focuses on a multitude of topics like sustainable real estate investing, decluttering, location independence, and the art of setting D.U.M.B. goals. Say Hi!

EDITOR’S NOTE: here’s another guest post from a friend who also lives out of a hotel, though it’s only half as cool because she doesn’t own it ;) –> True Life: I Live in a Hotel

[Top photo by Kieran Lynam // all others by Amnesty of her place!]

Jay loves talking about money, experimenting, blasting hip-hop, and hanging out with his two beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!

{ 95 comments… read them below or add one }

1 Jon @ Be Net Worthy October 28, 2016 at 6:06 am

Wow, I never heard of anything like this before! It’s a cool idea, but would never work for me. With a family and a dog, it’s not a good fit. But still, very intriguing. For the right single-person or couple, why not?

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2 Amnesty @ Primal Prosperity October 28, 2016 at 9:56 am

I agree that this is not an option for most people, but it suits my lifestyle like a glove. :)

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3 Ramona @ Personal Finance Today October 30, 2016 at 4:35 pm

First time I hear about this, too.

It can work for someone whose family is not too big. In our case, with a toddler and a pretty big dog, it wouldn’t work that well. We did purchase a ‘shack’ in a nearby village and in 2-3 years it will become a pretty decent home.

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4 J. Money October 31, 2016 at 6:55 am

I love so much that you bought that shack, Ramona, haha…

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5 Xyz from Our Financial Path. November 28, 2016 at 5:14 pm

We thought of moving into a full-service studio. It was 450 sqft. with all the amenities but it just wasn’t for us.

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6 Mrs. Mad Money Monster | @madmoneymonster October 28, 2016 at 6:33 am

I have never heard of this before reading this post! It makes total sense. I often feel I missed my chance to house hack since now married with children and pets. This is a great tiny living alternative. Thanks for sharing!

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7 Primal Prosperity October 28, 2016 at 9:58 am

I love that term… “house hack”! I will have to steal that. :)

I do agree that it is a great alternative to a tiny house because I don’t want to have to have a truck and find the land.

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8 Amanda October 28, 2016 at 6:41 am

Hi Amnesty, Great post, thanks! Although I scour the PF blogs this is the first I have heard about living in / renting out a hotel. Where would I go to find these specific listings?
Thanks!
Amanda

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9 Primal Prosperity October 28, 2016 at 10:00 am
10 The Green Swan October 28, 2016 at 6:45 am

Sounds like a great arrangement and that it suits you really well! I hadn’t heard of condotels before so it’s an interesting concept. I too want to travel much more in retirement and this sounds like a great option to accommodate that. I’m curious how popular these are, I’ll have to look into it more. Thanks, Amnesty!

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11 Primal Prosperity October 28, 2016 at 10:01 am

That’s cool to hear that you might be a fellow condotel dweller some day!

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12 Soon October 28, 2016 at 7:00 am

Fascinating blog! I have never heard of a condotel but the price is absolutely right. Especially with lakefront ;) May I ask where you live? Look forward to looking into this. Thanks for sharing your experience, Amnesty!

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13 Full Time Finance October 28, 2016 at 7:00 am

Interesting, I’ve never heard of such an idea. A follow up set of questions, is there any type of hoax involved that has limits on what you can and can’t do with the condo? Is there an association fee or any likelihood of a special assessment you might be on the hook for if the whole hotel has issues?

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14 Primal Prosperity October 28, 2016 at 10:05 am

Well, I’ve never used the term ‘hoax’, but yes, there are rules. As an investor, I solely invest in condos and never stand alone buildings. Sometimes the HOA can be a pain, and other times it is great. Of course, there are always rules that are not fun, like the pet situation, but then other rules benefit tenants such as keeping noise down and having in house pest control. Our HOA’s are part of the $425 each month that we pay. There certainly could always be a chance of a special assessment, but I still prefer that over having to replace my own roof. :)

If you do buy a condo of any kind, hotel or not, it is so important to get the financials from the association, look into their maintenance history, are there units not paying, etc…

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15 Full Time Finance October 28, 2016 at 10:50 am

That’s some auto correct for HOA. One last question, how did you go about assessing the state of the property beyond the condo itself. You alluded to the HOA checks for funding, but I’m also curious about the maintenance. As part of bringing a real estate inspector do they allow you all access to the hotel kind of like a condo to check say the furnace, air conditioner, water heater, basement, etc?

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16 Primal Prosperity October 28, 2016 at 1:38 pm

That is a funny autocorrect. :)

Yes, you can have an inspector look at common spaces in the building.

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17 Cedes October 28, 2016 at 7:13 am

I was seriously thinking about purchasing a hotel room when I was looking to move back home to be closer to my family. The building was right downtown, close to the park, close to the lake, close to restaurants and bars! But alas I decided not to move (yet!) but I’ll be keeping that hotel on my radar. It seems units are always for sale, and you can’t really beat $40k for downtown living!

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18 Primal Prosperity October 28, 2016 at 10:07 am
19 Band of Savers October 28, 2016 at 7:26 am

Very interesting concept. Never heard of this one before. Might have to look into this as an option for when the kids leave home.

Question: Would the hotel allow you to set it up as a Tier 1 rental in their pool then you rent it out yourself for the 2 years? I know it sounds odd but if you were collecting 70% of the rental costs back from yourself then the 30% of the $22k would be $6,600 which is the same as the $550 you are currently paying but they would then be responsible for al of the cleaning and changing of the linens, right? Then it would also be ready for the hotel to rent out if you decide to leave anytime.

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20 Primal Prosperity October 28, 2016 at 10:11 am

Wow, that is a really interesting concept! I’d have to put thought into the logistics of that. Now you have me thinking. :)

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21 J. Money October 31, 2016 at 7:01 am

Yeahhhh fascinating idea for sure! I wonder if the HOA would catch that though? Like you have to list names of info of renter or something and it would match up? (Or the cleaning/hotel crew would recognize that you’re you and thus spoil it?) Clever route for sure :)

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22 Apathy Ends October 28, 2016 at 7:51 am

Have never heard of this before – I am more the “want a yard” type personally but you have found a pretty sweet setup for traveling (and future investment)

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23 Primal Prosperity October 28, 2016 at 10:12 am

Yeah, I have been living in condos for years now, and occasionally, I still miss a yard, but not the maintenance. :)

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24 eema November 7, 2016 at 6:18 pm

sounds like a good retirement option

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25 Gwen @ Fiery Millennials October 28, 2016 at 8:06 am

That sounds seriously awesome. Congratulations on finding such a sweet deal!

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26 Primal Prosperity October 28, 2016 at 10:33 am

Thanks for the congrats, Gwen!

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27 Miss Mazuma October 28, 2016 at 8:07 am

Interesting option – we have an area nearby that I have looked at buying in one of these hotels but I haven’t gone through the process to see how the rental pool worked. This is great information!! Every time we check into a hotel my BF says “I could live here”. He will be happy to know that he can…though the 2 high school kids in tow behind him may not be so keen ;)

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28 Primal Prosperity October 28, 2016 at 10:17 am

Well, there are larger units here, but you will pay more for them. But it can’t hurt to just look and do the research.

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29 Penny @ She Picks Up Pennies October 28, 2016 at 8:44 am

This is so interesting! On our last all-inclusive vacation to Costa Rica, my husband and I were running the numbers. We could actually live in resort full-time (if the current rates held steady — of course they’d fluctuate) and come in just about even with our income. It was a fun little number game while laying by the pool.

What a cool peak into a condotel. Thanks for sharing!

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30 Primal Prosperity October 28, 2016 at 10:19 am

Resorts are the most common place for a condotel. I know places like Colorado have a lot of these at ski resorts. That’s fun that you looked into it and ran the numbers!

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31 J. Money October 31, 2016 at 7:02 am

YES!!!! Resorts, or even cruise ships :) You always hear stories of retired people just living on them full time and I feel like that could very much be me one day, haha…

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32 Free to Pursue October 28, 2016 at 8:56 am

LOVE it. I would absolutely do that if/when we decide to do some serious travelling. Mr. F2P and I have even talked about having a studio in the city and a farm property, spending 50/50 or our time in urban/rural living, which would feel pretty nice. A Condotel sounds like an AMAZING option!

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33 Primal Prosperity October 28, 2016 at 10:21 am

That is so interesting that you say that, because we were just driving in some rural areas that are about 45 minutes from our hotel and we were thinking of looking at property. Something to escape the city and also rent out from time to time, or hold workshops there.

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34 Free to Pursue October 28, 2016 at 6:59 pm

Excellent. The best of both worlds some might say. Good luck with the search/decision.

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35 Lisa O October 28, 2016 at 9:56 am

Well this is news to me and it sounds interesting. The only thing I don’t like is no dogs :(
Something to think about if you are a traveler or have an area that you go to often.

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36 Primal Prosperity October 28, 2016 at 10:22 am

Yeah, the no dog part is a deal-breaker for many people. I personally don’t want a dog because I am such a free spirit, so it works out well for me, at least.

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37 Joe October 28, 2016 at 9:59 am

I have a unit in a Condotel in Chiangmai, Thailand. My dad lives there and rent it out to Japanese tourist occasionally. It’s great for me because it’s completely hands off. I plan to live there part time once our kid is out of the house. :)
The big drawback is the high HOA/maintenance cost. $425/month isn’t cheap for a small unit. As long as you can rent it out, it’d work. Thanks for sharing.

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38 Primal Prosperity October 28, 2016 at 10:29 am

That’s so cool to have a place in Chiangmai! I definitely want to go there for an extended stay. Yes, $425 may seem high compared to Thailand, but you have to remember that this is all inclusive of utilities also. I have friends and family that live in houses in this area and they pay $200-$300 per month just to heat or cool their place during the extreme temperatures.

Plus, I did do a thorough financial analysis to make sure I knew what I was getting into.

I have talked to fellow real estate investors who cringe at the idea of HOA fees in general, but I have found a niche strategy that it works well for us and we cash flow nicely.

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39 J. Money October 31, 2016 at 7:04 am

So awesome, Joe!! Can we do a “dad’s weekend” there when my kids leave the house too? :)

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40 Mrs Groovy October 28, 2016 at 10:03 am

Just when I think we’ve sworn off real estate as an investment, I learn of THIS! Love it. Thanks for sharing Amnesty & J$.

Amnesty, what would be the first step in researching as an investment only? Would you look for a unit near you? Or do you think the infrastructure of a hotel would make it easier to purchase out of state?

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41 Primal Prosperity October 28, 2016 at 10:33 am

As an investor, I love to look at properties in person. For me, I’m not a shopper, so this is my form of ‘shopping’… :)

However, not every location is good for real estate investing, so some people will have to look at other states and a hotel room would certainly be easier than a stand alone building when you are not there physically. Plus, hotels are almost always in good locations, so that cuts down the research of the neighborhood.

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42 Mrs. Picky Pincher October 28, 2016 at 10:41 am

Man, at first I was skeptical, but a $550/mo housing cost (especially in an urban area) is AMAZING! That does suck that there’s no A/C but at least it was a good bargaining chip during negotiations.

I love the idea of minimalist living, but I’m more of a house person myself. I grew up in a more rural area, so I enjoy having a yard and the ability to garden and grow our own food. But hey, if you like the small living with minimal upkeep, sounds like a condotel is a good option.

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43 Primal Prosperity October 28, 2016 at 10:51 am

The A/C is a pretty easy fix. We would just buy a window unit. But, one window is inoperable, so that would mean that we couldn’t open any windows in the summer. We had every intention of spending the $2k to get A/C, but it turned out that we didn’t need it. It is cooler by the lake and fans do amazing things in tiny spaces. :)

I do sometimes miss a yard and it drives me crazy that I can’t compost. But overall, my life has been greatly simplified and more enjoyable. I agree though, this is a living situation for only very few people, but a decent investment overall for anyone.

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44 Amy October 28, 2016 at 11:21 am

What about the indoor vermicomposting? They have indoor worm farms that could be used. It wouldn’t be enough to compost all your food waste but you could do some of it.

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45 Primal Prosperity October 28, 2016 at 12:07 pm

I’ve thought about that, but I still think it will be tricky in this small space. There is a company that started around here who drives around and collects compost. I was thinking of contacting the Owner and see if we can set something up at the hotel.

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46 Fiscally Free October 28, 2016 at 11:02 am

Hotel living sounds pretty cool, but I’m not sure I could stand to cook in that kitchenette. We would probably spend too much eating out.

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47 Primal Prosperity October 28, 2016 at 11:08 am

Yes, the kitchenette definitely takes some getting used to! What I have found though is that we just eat more simply now, rather than go out too often. Raw fruits and veggies make a big portion of my diet in the summer time.

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48 TJ October 28, 2016 at 11:27 am

This sounds amazing. I didn’t think I’d want to own again, but I could totally see myself owning in this scenario where i can just throw my unit into a rental pool when I’m out of town.

I totally would have gone for the towel/linen service too, provided it was a reasonable expense.

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49 Primal Prosperity October 28, 2016 at 11:49 am

Yes, a hotel room acts as a great jumping off point for travel. Real estate can certainly be a great investment, but the key is to buy it properly. We bought another rental condo before this hotel unit for only $14,900 (plus $5k upgrades). It was a cute one bedroom unit and we considered living there, but it felt too suburban for me.

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50 Justin October 28, 2016 at 1:11 pm

Looks pretty cool! Though we currently live in a 4 BR house with our 3 kids, this kind of living is very appealing. And having a condo in a hotel would also make sense if/when kids come to visit. Not sure we’ll ever downsize but it’s fun to think of what we COULD do when we don’t need as much space for the kids.

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51 Primal Prosperity October 28, 2016 at 1:36 pm

This sounds like it would be a great scenario for you when you are ready to downsize.

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52 Kayla @ Shoeaholicnomore October 28, 2016 at 1:17 pm

How do you wash laundry? Is there a machine on your floor that’s coin operated?

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53 Primal Prosperity October 28, 2016 at 1:34 pm

There are washers and dryers in the basement. You buy tokens at the front desk for $1.50 per load. We actually rarely dry our clothes, because it is hard on the clothes, so we use a drying rack that folds up and fits under the bed. If someone wanted to, they could buy a small apartment washer that rolls around and hooks up to the sink. But, as a minimalist, this doesn’t sound appealing to me.

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54 Jacq October 28, 2016 at 1:32 pm

I’ve lived in hotel rooms (twice extended stay, once hotel no kitchenette) a few times. The refrigerator knocking drove me crazy in the one place, because it woke me up, thinking someone was knocking on my door! I know I can do it. For me, having a separate place to sleep vs other activities (TV, eat, read) is important. I’m targeting a tiny house with a pocket door for the bedroom, some day.
Living in a condo, I was noting my minimal garbage & interest in composting, and a coworker suggested looking into if there are any local cooperative gardens who might want my coffee grounds etc. That’s still on my to do list, but something for you to consider.
One of my first questions to my realtor when looking at these condos was making sure they could be rented out. I’ve been mindful in painting/decorating to make it appealing to not just my taste, but easy to rent or sell if my situation changes. (I got job offers in 2 different states the same day last year.) Your hotel living sounds like a lot of fun, with nice ROIs. :)

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55 Primal Prosperity October 28, 2016 at 1:40 pm

You are so smart to do the proper research before you buy. I always recommend that to anyone, even if they think they will live there forever. You just never know when you might have to move quickly!

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56 Latoya | Femme Frugality October 28, 2016 at 2:34 pm

I’ve never heard of a condotel before. These numbers sure make it sound appealing and I could certainly see it working for those comfortable with minimalistic lifestyles! Very intriguing!

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57 Primal Prosperity October 31, 2016 at 2:32 pm

Yes, perfect for the minimalists who don’t want to tote around a whole house on wheels! :)

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58 Sarah @tortoisehappy.com October 28, 2016 at 3:31 pm

This would be such a perfect solution for my in-laws. They’ve retired overseas but still want to own a place in the UK. I don’t know if the idea really exists here, having just had a quick google, but maybe it will become possible in the next few years :)

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59 Primal Prosperity October 31, 2016 at 2:33 pm

I definitely think it will become more popular in the future. And, yes, perfect for retirees!

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60 Zee Zee October 28, 2016 at 3:56 pm

Amazing!!!!! Something great to put in perspective

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61 Michelle October 28, 2016 at 4:50 pm

Love this! We thought about this once. When we visited Kauai a few years ago, one of the resorts there actually was selling one of their hotel rooms. It was super cheap and we thought about it for a few months!

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62 J. Money October 31, 2016 at 7:08 am

That would be incredible :)

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63 Primal Prosperity October 31, 2016 at 2:31 pm

That would be fun! Condotels are actually fairly popular in resort areas. I’m guessing they are much more expensive to buy and the amenities probably make for some hefty monthly expenses. If the monthly holding costs are too high, then I personally would consider it too risky of an investment, for my tastes, but a wonderful personal purchase if you can afford it!

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64 Team CF October 30, 2016 at 9:55 am

Very cool, love that you found yourself a great opportunity that works both financially and personally. Good for you!
Checked to see if any such thing exists on this side of the pond, but unfortunatly I could not find anything. Too bad, seems like a pretty decent investment opportunity.

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65 Primal Prosperity October 31, 2016 at 2:27 pm

Unfortunately, I don’t know much about overseas investing. But, I did some research before we bought this unit and some articles seemed to suggest that this will become much more popular in the future. So keep a lookout!

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66 Andre Albritton October 30, 2016 at 9:20 pm

Well my mind has been blown lol

Had no idea the option of buying an hotel room was even possible!

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67 Primal Prosperity October 31, 2016 at 2:09 pm

My mind was blown also, when I first found out about this.

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68 Financial Samurai October 30, 2016 at 10:41 pm

This is great you were able to pay cash for your condo tel! The condo tell mortgage market has dried up after the financial crisis so just be aware.

What city are you in? I also have a similar properties but in squall Valley, Lake Tahoe. It’s a two bedroom two bathroom apartment with a kitchenette, closet, and a bunch of amenities. My whole goal was to try to live there for about three months a year but it’s not really working out because I’m always drawn back to San Francisco.

Sam

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69 Primal Prosperity October 31, 2016 at 2:14 pm

Well, we buy cash properties with a line of credit, so everything we buy is less than $50k, which is outside of the mortgage industry anyway. So, with each purchase, even non-hotel, we run that risk of selling back to only cash investors. However, this just happens to be the niche that works for us and we are definitely the buy and hold investors. Unfortunately, every investment has a risk. I actually hate selling anyway, but since our properties are so cheap, we wouldn’t lose a ton of money if we had to dump them quickly. And since they are cheap and cash flow nicely, there will always be an investor market. At least that is my thought process! :)

I don’t want to disclose the location online, but feel free to shoot me an email: PrimalProsperityforAll (at) gmail.com

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70 [email protected] October 31, 2016 at 12:23 am

How do Condotels tend to do with appreciation? Do they appreciate slower or faster than single family homes? Condos? Is the value limited only to other units in the hotel or do they use the standard per square foot comp method for everything that has sold within 1/2 mile and within the last three months?

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71 Primal Prosperity October 31, 2016 at 2:19 pm

As an investor, I don’t count on appreciation, we buy and hold, so for me cash flow is the biggest financial analysis. Also, since we buy so cheap, if we ever had to ‘dump’ a property quickly, we wouldn’t lose much. When my realtor and I ran the comps, we used solely this building, because there is nothing else in the area for that cheap. The units do move, it appears, so that was good. It definitely was an investment that I had to think about for awhile. I didn’t want to just jump in, but there are 50 other owner occupied units, including a local TV personality.

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72 Mr. Tako @ Mr. Tako Escapes October 31, 2016 at 4:15 am

Interesting investment. I can’t help but wonder, what does the hotel get out of it? If the hotel market was good and they could get good nightly prices for the rooms, why would they ever sell?

Hypothetically speaking, if I was a hotel owner, I would only sell rooms if I could not consistently rent them out on a nightly basis at a rate that was cash flow positive.

I’m no expert, but I would guess the hotel is trying to free up capital to invest in better places and/or minimize losses.

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73 J. Money October 31, 2016 at 7:09 am

Great question!!

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74 Primal Prosperity October 31, 2016 at 2:25 pm

Hmmm…. that is a very good question. I’m not really sure. But, when I did my research about condotels, I found articles saying that they are becoming more popular. It very well could be a way for the Hotel to maximize their investment. I also know that there is definitely a ‘busy’ season here and a ‘slow’ season, so this probably helps to normalize the peaks and dips.

Like any real estate investment, especially when you are buying in a multi-unit building, it is soooo important to understand the finances of the management. We did a thorough analysis and didn’t find anything that made us hesitant. But, again, no investment is without some risk. It is just a matter or minimizing those risks with proper due diligence.

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75 ZJ Thorne October 31, 2016 at 12:10 pm

This is fascinating! I did not know you could do this. I like how easy it makes it to share with people you love.

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76 Mistress Susan October 31, 2016 at 5:35 pm

I work on the administrative side of the condo industry and I am a former HOA president in Atlanta. I am very familiar with condos and condotels. My view is they only work best in 3 options: if you are renting a unit, you are an investor or you want to buy a very high-end condo/condotel as your primary unit.

I first looked into condotels when I lived in NYC. Most condotels are going to be in resort/tourists places like Miami. The biggest downfall I see is the same as with condos: financials. Usually places like these don’t have enough money in reserves, people are not paying their monthly fees, too many people are moving out and in/transient or management steals the owners’ money.

I am a minimalist. My last condo was 525 sq ft. As someone who has been in the condo business for 9 years, I would NOT buy another condo or condohotel. However, I would love to rent one in a high-end building until I could afford a simple fee townhome in the city, which is not cheap.

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77 Primal Prosperity November 1, 2016 at 12:58 pm

You are correct, that all of these things can happen, which is why it is so important to read the financials including past and future budgets and the maintenance schedule before you buy.

I know many investors who won’t buy condos because of the HOA’s. However, in my 10 years of buying condos, I have not had too many issues in this regards, at least nothing disastrous. I have had way more cost issues and stress with stand alone buildings. Plus, I have an engineering and construction background and I trained as a home inspector, so I have seen my share of problems in stand alone buildings.

I like having the extra layer of property management and building maintenance, because I like to be mobile, so it works out well that the building is managed by someone else. Plus, very few things can go wrong inside your four walls. Also, I can’t find any stand alone buildings/townhomes at our price point, of less than $50k, that aren’t total fixer uppers, and I don’t like the mortgage route. This personally just happens to be my niche, but it is not for everyone.

To recap though, proper due diligence is a must for any investor, regardless of the property type.

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78 Millennial Money October 31, 2016 at 10:11 pm

I think this was a really smart decision. For $41,000 they were able to buy a convenient hotel property that will likely always be kept up and appreciate in value. Both a great life and investment decision. I didn’t know this was even possible. Thanks for sharing.

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79 Primal Prosperity November 1, 2016 at 1:00 pm

Yes, I’m happy that it really worked out well both personally and as an investment.

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80 Beth November 1, 2016 at 12:22 pm

This is so interesting. I have never heard of this. It sounds appealing to me and I would love to do this in the future. I am a simple person and I don’t like cleaning that much either and I am starting to realize a smaller space would alleviate that. I also don’t like a lot of stuff. It is assumed that women enjoy decorating but not me – I have barely anything on my walls and close to zero decorative items. I like the idea of all of that but it is just not in me to a) buy the stuff and b) then have to dust it. LOL

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81 Primal Prosperity November 1, 2016 at 1:05 pm

As a minimalist myself, I enjoy getting items from the thrift store to decorate. Or, even better, multi-purpose items. For example, you can hang musical instruments as decoration, or put out a nice fruit bowl.

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82 J. Money November 9, 2016 at 11:42 am

@Beth – Haha same!! (Although don’t let my wife see this as she’ll ask me when the last time I actually cleaned was ;) I think of myself more as an “organizer” than cleaner)

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83 Rekki November 2, 2016 at 3:42 am

I love this article! Thank you so much for sharing! I stumbled across your website and love it! Thanks for sharing your knowledge and experience!

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84 J. Money November 9, 2016 at 11:43 am

Glad to hear, Rekki!

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85 The Vigilante November 28, 2016 at 1:21 pm

Sounds like a great arrangement for someone who wants to be free to travel! Thanks for bringing the condotel to my attention – I’ll have to remember this in about a decade!

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86 Primal Prosperity November 28, 2016 at 10:50 pm

Yes, it definitely will work well for traveling and we can’t wait to take advantage of that!

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87 MarciaB November 28, 2016 at 4:02 pm

I googled this concept for my home base (Portland OR) and don’t think it’s a thing here yet. Great concept!

My one question is whether from time to time the owners can assess a big pile of money for a major repair/replacement (like the roof, an overhaul of the plumbing, etc.)? That would throw the ROI calculations out of whack.

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88 Primal Prosperity November 28, 2016 at 10:53 pm

Hi Marcia, You are correct that a large special assessment can throw the ROI calcs out of whack, but that is with any real estate investing. I have been investing in condos for 10 years and have only had one special assessment of about $400. Usually vacancy and turnover are a much higher risk to ROI. It is also very important to review the budget and maintenance documents and talk to the Board or General Manager. They can give you an indication of any special assessments that might come up within the next 5 years. Most HOAs budget for maintenance in the regular assessments to avoid this.

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89 Ten Factorial Rocks (TFR) November 29, 2016 at 2:42 am

Interesting concept. Of course, there are many ways to skin the housing cat. The purpose is to minimize the cost of shelter as much as possible during retirement. For some, this option can work and for others, an international retirement achieves it. For the cost of just $500 a month, you can rent a 3-bedroom, 2200 sq. ft. independent home in an English-speaking foreign country that I cover in one of my articles. This comes without the $41,000 or any purchase investment, which all things considered, is a huge commitment in addition to the $550/month outflow. But then, to each their own. The concept is interesting for sure.

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90 Primal Prosperity November 29, 2016 at 10:44 am

Yes, we are already setting our sights on traveling the world to places that are far cheaper than the U.S., but this is where our family is, so we need a home base here. However, when we travel, we don’t plan to stay in 2,200 SF unless housesitting or something. We just don’t need that room and I’d rather be out exploring. And yes, $41k is a big outlay for many for housing costs, but this is also an investment for us. I like to balance my retire funds with real estate. Makes me feel a little more diversified. Thanks for the input!

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91 Ava @ My Meena Life November 30, 2016 at 8:57 am

I lived in a hotel for a year. I didn’t exactly want to, but it was the only housing option immediately available in the small German town we needed to move to for my husband’s company. It wasn’t as fancy as this one – no gym, pool, etc. – but it was cleaned every week and taught us a great deal about living in a small space. And my favorite thing was being able to have family stay next door with their own room and privacy – it’s a great perk!

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92 J. Money December 6, 2016 at 12:16 pm

Love it!! Amazing how well you can adapt when forced to too, right? We’ve moved our family of 4 into an 1,100 sq feet place which is bigger than a hotel room but still much smaller than we’re used to (we also had to do it for work), but I’m slowly getting used to :)

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93 Seth M Drebitko December 30, 2016 at 6:33 am

I’d considered it a long time ago. I’m pretty comfortable in a cozy space… but then I got married, and had a kid and got dogs. Somehow I ended up in a massive home, which has it’s own perks.

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94 J. Money December 30, 2016 at 7:00 am

Haha yeah, me too. Although my family of 4 + cat IS fairly cozy right now in our 1,100 sq ft home we just moved into for my wife’s latest job. I figure if we can’t get used to this, there’s no hope of ever moving into a hotel room like I want to one day :)

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95 Kevin January 5, 2017 at 11:07 pm

I was thinking of buying a condotel also. Do you know what happens if the hotel goes out of business? What would happen to our units?

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