Interested in getting in on the condo hotel trend? Perhaps you've heard about this new type of vacation home ownership and it sounds right for you. 

After all, a condo hotel unit, or "condotel," is typically located in a great vacation destination.  It's in a three-star or higher property.  And a management company takes care of all the hassles typically associated with ownership, including maintenance and finding renters when you're not using your condotel unit.

Buy Condo Hotels in Pre-construction Phase

With many new condo hotel properties coming on the market, when is the best time to buy?  The answer is easy.  In early pre-construction phases. 

Most condo hotels begin selling their units long before the property is built, and often before even the first shovel-full of dirt is overturned.  The idea behind a pre-construction purchase is that you're buying tomorrow's property at today's price.

A Deposit Holds Your Condo Hotel Unit

In some cases, you simply place a reservation with a deposit of usually 10% to 20%.  The deposit goes into an escrow account of the developer.  The funds are invested in a low-interest passbook account, and any interest paid on the account (usually minimal) is applied to the purchase price.  

You can expect to go to contract once the developer has sold enough units to meet lender requirements (usually about 50% of the total number of units) and has applied for his construction loan. 

At that time, your reservation will be converted into a hard contract, a binding agreement.  Depending on the recission period of the individual state in which the property is located, you'll typically have 7 to 15 days to decide whether you want to proceed with the purchase or cancel.

The Construction Process

How long does it take to build a condo hotel?  Well that depends on a number of factors such as whether the property is to be built new or whether it's a conversion of an existing hotel or resort.  The weather and the city's permitting process are also key factors.  Generally, for a new property, the construction process takes close to two years; conversions take six months to a year to complete.

Appreciation Makes Pre-construction Appealing

Some people wonder why they should buy in pre-construction phases.  After all, your deposit monies are tied up for one to two years.  The answer is you get in on the ground floor when prices are lowest and unit selection is greatest. 

As the condo hotel is being built, it is gradually appreciating.  Developers implement planned price increases at various stages of the selling process, often as many as three to five price hikes. 

If you purchase your unit at a pre-construction price, it potentially could be worth significantly more at completion.  When you sell, that translates into a higher profit for you.  The actual profit of course depends on the general market conditions, interest rates and competition.

Work With an Industry Expert

If buying a condo hotel unit in the early pre-construction phase is best, how you do you find out about projects?  After all, it's not as if there's a building structure to catch your eye as you drive by. 

Your best bet is to find a realtor who specializes in condo hotels.  He or she can keep you informed of new condo hotels coming on the market and tell you which ones he would recommend, and which ones you should avoid, and why. 

He can provide you with enough data to comparison shop, ensuring you compare apples to apples.  He may be able to offer better choices for your consideration than the condo hotel you may have heard advertised on the radio or seen in the newspaper. 

The specialist that you choose should be familiar with condo hotel developers and building trends.  Most importantly, the realtor you choose should represent the buyer's needs first and foremost, not the developer's. 

Joel Greene is the President of Condo Hotel Center located in Miami Florida, which specializes in the sale of condo hotels.  Visit his web site, www.CondoHotelCenter.com, for more information on condo hotels and to see condo hotel listings, photos and prices.  You can also sign up for his free Property Alert newsletter to be notified when new condo hotel properties come on the market.