Condo-Hotels allow owners to enjoy their vacations here and earn rental income when owners are not using it. Owners have a choice whether to rent or not. 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. Owners form Association. They elect the Board of Directors, which 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 benefit: The owner gets a vacation home, rental income, and deduction of some expenses.

These are not cash cows, of course, and if your rental income covers your maintenance and property tax, it is great but is not guaranteed. 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, adversely affecting your bottom line.

Costs. Condo-Hotels usually can cost 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 condo-hotel unit) balconies, small condo-hotels come at higher prices.

Financing for condo-hotels can be 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 only few  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-owners association fee, or maintenance fee (in Daytona from $255 per month to $528.50 for a studio, maintenance of one-bedroom units could be -more and even double in some condo-hotels. Association fee usually covers the upkeep of the property, cable, local phone, security, garbage removal, all utilities, exterior paint, roof, pool, parking lot. Association fee does not include rental-management fees and expenses. Basically, everyone pays the association fee whether they rent with the Front Desk or not.

Other fees include property taxes (approximately 2% of the value), liability and content insurance ($200 to $500 a year), and Special Assessments, if association has to do the work for which it was not budgeted.

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)

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.