Tips: Condotel Property Invesments

Over the last decade, residential property investment in large cities has soared. Most are apartments but lately, the property type known as a condominium hotel – condole – has become increasingly popular.

Security and ease of travelling distance is a major consideration for owning property in the city centre – especially for young executives. If not used to live in yourself, this property can also be a lucrative business for rent.

The condotel is a type of property in the city centre which is heavily marketed. Somewhat different from apartments, condotel units are designed more along the lines of a Boutique hotel.

Condotels are arguably even more comfortable than hotels, because they are equipped with a living room, dining room, and kitchen. It is ideal to live in. Of course the rent will be higher than same-class hotel rooms. That is why it is considered a condotel investment is a profitable one.

With a professional management company who have experience in the field, modern and high spec settings and rent collection plus business services circulation, this is bound to be more secure.

Interested in purchasing a condotel? Wait until condotel sales and marketing team come to you. They will have have attractive offers with a capital guarantee behind the warranty (guaranteed return).

They will provide a quote to you as a potential owner, to occupy the condotel units with a specified period per year. Typically ranging from 12-30 days you are free to occupy the condotel units for the purposes of business or on vacation. When not occupied, the condotel unit will provide additional income to you, from the rent generated. However, the location offered must be in accordance with business development. For that one, the condotel developer has had a business network in major cities and tourist destinations in Indonesia, such as Jakarta, Bali, Bandung, and Yogyakarta.

With the advantage of a business scheme manager at your condotel, it is an attractive investment alternative to conventional properties such as buying a house, or land or office space.

Condotel investment is a backup option, especially when the deposit is at a low level. For example, in 2012, the guarantees on the rentals of condotels where reaching 8-12 per cent a year and the value of that is quite tempting.

You have to be careful when the rental deposit has been included in the selling price of condotel. Therefore, alternative withdrawal rents (on rental guarantees) at the beginning of the investment period, may reduce the price of the condotel units.

There are at least five things that you should consider before buying units in condotels:

Buying off-plan (before the building is completed)

It is not unusual today to pay the developer before completion of construction. The same with a condotel. Those who buy a condotel unit before this will get a much cheaper price. Why is that?

They will bear a higher risk, as the possibility that the condotel is not finished within a certain period of time is high. Multi-story buildings with so many complex construction techniques will take a very large cost. Fluctuations in material prices and interest rates varying would increase the construction process. That is why the initial risk to the condotel owner is high – and uncertain.

Note carefully the business contract

Which must be considered here is the rental guarantee scheme. Guarantees given usually last for several years. The manager can also offer business schemes where a percentage of your profits will be reduced after a certain period of time. That’s what you should look at. KreditAja.com suggest, you must ensure that you have full knowledge about it. If not, take advice, perhaps asking the opinion of colleagues who are expert on construction management.

In addition, the condotel manager can also offer a profit sharing scheme, based on the occupancy of the unit. You have to be careful, despite having received a net benefit. Therefore, you usually have the advantage of cutting other costs incurred such as maintenance, marketing fees for managers, as well as other operational costs. Comparative advantage is popular among managers and owners of condotels, normally is 50-50 or 60-40.

You have the right to stay in the span of a year. Take advantage – especially if you are in a location popular vacation area. Even if you don’t, you can still benefit financially. Usually the manager gives a voucher to stay as part of your quota. Sell it if unused.You can also give the voucher to your business partners, family or friends.

Changes

The right to stay as a condotel owner will change over time. You should not be surprised if you staying rights are reduced. In fact you may have to make a reservation first when the condotel is in your possession. Understandably, the unit can be already booked to someone else and although your are the owner, they come first.

The ownership

In multistory buildings, ownership rights are the right to live there (strata title) that will expire in a certain time period, eg within 20 years. Separate fees are required to renew the rights to use it and you must reserve a little while before it expires.

That’s five tips from KreditAja.com for you who are interested in buying a condotel. Because of its nature as an investment, you should be careful to determine whether to buy or not is positive. If your interest in condotel unit is high enough, make sure the underlying returns commensurate with the investment objectives you have previously planned.

If you find these tips useful, or are interested in any of our services, please visit our website, KreditAja.com.