Hotel Room Condo Sales
Condo hotels are one of the hottest products in today’s real estate market but most are in the resort towns and high priced. I am presently building a project off of U.S. 131 North of Grand Rapids Michigan and the overnight traffic is heavy with no concern of vacancy. Close to completion in 2007 I will be offering the rooms for sale but I do not know what to ask. This is a Goldmine and what do you ask for that?
The GR area is growing much, that is not a concern. With 5/3 Ball Park just a few miles away, Meijer and Wal-Mart’s new biggest store in the world going up soon, a next to the highway Hotel is a given. This is in no way a resort town, business is what we do here and rooms for overnight stays next to the highway is good business. I do not know what to start the rooms out at, possibly in the 75k up range mid construction with a 60 to 40 split with the management company that will operate the 90 room Hotel. The numbers look good at average $89.00 per nights stay with 250 days per year occupancy with a return on investment of +- 18% and just to let you know why I am doing this, I bought my first room in a Motel along U.S 10 years ago, I have made my money back many, many times over.
You bought a single room in a Motel 10 years ago?
Tell me more about this.
U.S 10 is a highway in Ludington MI
I bought a room in an old Motel across the street from the beach in 1998. That year we went to the Gus-Macker (Basket Ball 3 on 3 games) and the owners, my wife’s relatives needed money to make the place look good, I offered to buy one room from him for 30k which was a high price at the time but I figured we would use it a lot. We did not use it at all but stayed at the in-laws on another beach. Made all my money back in 2.5 years after the cost operations which is 50%.
and how did you handle title to this one room? Did your relatives do a condo conversion? Do you still own this room? Does it continue to be profitable?
Your post was interesting. I never heard of buying a motel room. I have heard of time share condos or but buying a motel room !!! In your proposal who will manage the room and how does the title work ?
commercialking:
We did it with an LLC but only two of us were in it. My portion was limited to that room only and I am sure they tried to rent the other rooms first but up here most rooms stay rented most of the year for either beach traffic or snowmobiling in the winter. I no longer own the room nor do they, it was sold, torn down and rebuilt into a shopping strip mall in late 2004.
ashwin:
Management will be put out for bids nation wide or if pre-construction sales =75% the room owners may wish to vote and go with a nation chain management team. If they do, they lose any rights to vote in the future as they will completely takeover operations. Look on the web under TIC investments, it will be similar ownership but does not require the 1031 section and is limited to the rooms you own.
I hope that this request is appropriate for this Forum...
WCI: I would like to purchase multiple rooms pre-construction! Please email me your contract...
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cobblestone, we are not ready to sell rooms at this time. I am shooting for june date but I will let you know.