Condo-Hotels allow owners to enjoy their vacations here and earn rental income when owners are not using it.

Condo hotel combine vacation home ownership and real estate investing.

Once sold to individual owners, developer transfers the property to the condo-owners association, like in apartment condominiums. They elect the Board of Directors, who is the governing body  for the Association. Usually the condo-hotel contracts rental management company to operate Front Desk and provide rental services for the owners. The unit owner can then enter into a contract with a rental manager for rental of the unit. Every condo-hotel has its rules regarding rentals. Please, check with the management company.

The upside: The owner gets a vacation home, a mortgage-interest deduction if there is a mortgage on the unit and rental-income stream. Where can you buy a unit in direct oceanfront building for under $200,000 and often even under $100,000.

These are not cash cows, of course, and if your rental income covers your maintenance and property tax, it is already great. If there is some cash extra to help paying part of the mortgage, it is a bonus. With the market so slow rental income is down from previous years, thus affecting their investment value.

There are, however, a few things investors should think about before buying. Condo-Hotels can cost the same or even more per sq. ft. than residential condominiums. Of course, a $520,000 residential brand new condo on the ocean sounds a lot, but with 2,536 sf of living space it is $205 per sq. ft., while a 384 sq. ft. condo-hotel unit for $99,990 is $260 per sq. ft. Considering that we are comparing an older hotel unit hastily converted to condo with minimum money and effort to a luxury 3 bdr/2 Baths condominium with modern kitchen, gorgeous bathrooms, huge  (bigger than the whole condominium unit) balconies, you understand that smaller packages are coming at higher prices.

Financing for condo-hotels can be a little tougher to get than for vacation homes. That's because it's considered investment property, so a condo-hotel purchase may cause a higher interest rate. There are fewer lenders financing condo-hotels, and there are significantly less programs available. You most probably can't get stated income/stated assets; 0,3,5 or even 10% down payment, etc.

Other costs include condo-association fees (in Daytona from $250 per month to $500 for a studio, maintenance of one-bedroom units would probably be more. maintenance fee covers the upkeep of the property, cable, local phone, security, garbage removal, all utilities, exterior paint, pool, parking lot. Maintenance fee does not usually include rental-management fees and expenses. Basically, everyone pays the maintenance fee whether they rent the unit out with the Front Desk or not. Sometimes rental-management fees and expenses are deducted from the rental income. In addition the owner is responsible for paying property taxes (approximately 2% of the value), liability and content insurance (usually very small amount), and Special Assessment, if the need comes.

Owners will have to pay income taxes on rental income they earn from the property -- if it's rented for more than two weeks. However they can deduct interest, maintenance fee, and taxes (please, verify with your tax man)

When insuring condo-hotel units, there are specific things the unit owner
is responsible for and specific things the building owner is responsible for
covering. Here are some tips and guidelines to insuring a condo-hotel unit.

Condo owners Association's policy cover the entire property. Unit owners are responsible for the contents and liability insurance if they plan to rent their units.