Hotel Condo

Not to state the obvious, but the only way you will get accurate info is to contact the listing broker. Even if somebody on this site claims gives you some info, you cannot base a decision on that.

I think s/he is trying to understand the overall ownership structure...

Although it varies I have heard the standard arrangement for your off days when the room is rented is calculated as follows; marketing expenses are taken off the top and the balance is split 50/50 between the owner and the hotel.

As to the stability to these investments the jury is still out. This is a relatively new form of ownership and has not survived the test of going through a full rise and fall cycle of the real estate market.

I imagine your investment will track pretty close to how hotels are performing in Manhattan. Right now demand is outstripping supply as many hotels have been converted to condos. However, there are a slew of hotels in development right now in Manhattan. Remains to be seen if an oversupply results and thereby driving down hotel rates.

I saw a listing for one of these places in midtown & it seemed like a time share type arrangement. Those haven't proven to be such hot investments, I think.

Hello everyone (I would address individual posters but you are all Anons!). I actually represent a lot of hotel-condo listings at 1 CPW alongside my father Doug and I'll be happy to address your question(s).

First things first, not all hotel condos are the same, so what I mention really only applies to 1 CPW (although there are similarities). Right now you buy your unit and pay the common charges and taxes. There are various other small fees that are involved to keep the hotel running on a day to day but those get deducted out of what you earn. Now lets say you decided to stay in your unit for 10 days a year, the other 355 days your unit will be in the rental pool and when someone stays in the unit you will earn income. When you stay in your own unit you still have to pay a clean up fee and a few other small fees, but it basically boils down to a fraction of what you would pay were you to actually rent the unit from the hotel.

You can use the units for 180 days a year, but the sweet spot is really between staying 1-3 months max. If you are using it as a pied-a-terre and plan on staying longer than 3 months (or 180 days for that matter) you are really better off trying to buy a regular apartment as the numbers start to work against you.

Is it a good investment? It depends on what you need it for. If you are an investor looking for a yearly return, the short answer is no. You will probably get a 5% return on your money, maybe more if you luck out. If you are someone who wants an apartment in the city with amenities but only use it every now and again then yes, it is a fantastic investment. Not only would you have an awesome place to stay when you are here, but when you aren't it will earn you money, typically paying off your common charges & taxes and then some. Additionally, the longer you hold your unit the more that it will be worth when you go to sell. That is where you will make a real monetary gain.

As far as how much people make each year... it varies (obviously) but you should probably make around $40,000 to your pocket when all is said and done. Which is to say, your CCs & taxes are paid plus any misc fees that you had throughout the year. $40,000 isn't too shabby. Mortgages are not going to be included in this number for a variety of reasons.

If you have any more questions please feel free to give either my father or I a shout, we nearly almost have a listing or two for sale (my father has sold over 200 of them when there are only 167 in the building) and if we don't we will in the future. Plus, it is hard to buy something you don't completely understand so we could walk you through it to see if it makes sense for you. (mrussell@bhsusa.com)

Hotel Condos exist because they are attractive financing to developers looking to bypass more expensive borrowings. These really should be securities and not real estate, but fortunately the developers got a no-action letter from the SEC on this question. Buyers have little upside, and most of the downside.

lmao

JuiceMan, Do you see a different risk reward profile on this?

@ Riversider: If you are talking about all hotel condos then maybe. At Trump International the buyers are all very happy and have been for over 10 years. The upside is that they get an amazing pied-a-terre that doesn't bleed money (having to pay common charges & taxes when you aren't staying there), the downside is that if you are looking for a comparable apartment in the area that isn't a hotel it's going to cost you nearly double.

I agree with your point completely Riversider, my laughter was towards MRussell for his post, that he is shilling hotel condos as an "investment" and that he revivied a 2+ year old spunky thread.

i saw spunky and was overwhelmed by certain emotions. interesting that now SE attaches names to certain early anons. but it only seems to be for the initial post. too bad.

mrussell, i'm fairly certain that they are "all" not very happy, and may not have been for 1, 2, 5 or even 10 years. most, maybe, possibly likely, i don't know myself. but to say all?

"feel free to give either my father or I a shout"

They ARE all happy, no lie. That's because they can't see that fugly Trump International building from their condo-hotel units.

@ JuiceMan: Truth be told, this was my first forum post on StreetEasy. I didn't even realize that it was 2 years old.

And they are an investment for some people, and not for others. I actively tell people if these units are not for them and the needs they describe to me.

Anyone happy in a Trump International would be equally if not more happy purchasing a Trump Condo and paying to rent a hotel for their NYC stay. Condo hotels are the Real Estate equivalent of Whole Life Insurance policies. When investments become complex it isn't because they offer flexibility it's because they are meant to obfuscate the true cost.

Riversider, are you suggesting that Trump International is a smoked-glass-and-golden-mirrors trick?

Fair enough MRussell, but be aware that the streeteasy crowd is a pretty savvy bunch when it comes to real estate, especially when it comes to investment value. Don't want you to get off on the wrong foot.

LOL.
I have no reason to doubt it's a fantastic hotel, and that guests enjoy their stay. But be a source of funds for it's operation. PASS!

in other news, Yahoo sells hotjobs to monster for $225MM...alright, thatz a huge #...... the downside, Yahoo purchased hotjobs for $436MM in 2001....

Said yahoo's CEO, "we used hotjobs as a pied a terre model for internet job sourcing and we loved where their headquarters were based!, YEAH!" -must imagine yahoo ceo imitating Howard Dean's infamous scream-

aboutready
25 minutes ago
ignore this person
report abuse ...mrussell, i'm fairly certain that they are "all" not very happy, and may not have been for 1, 2, 5 or even 10 years. most, maybe, possibly likely, i don't know myself. but to say all?

since when are you the queen of truth?

hfs... aboutcomm... I can't see what you are typing.. can you type harder?

I can sure try. I seem to suffer from Columbiacounty

Speak up hfsabout. Can't hear you.

@ JuiceMan: I certainly hope that the people on StreetEasy are Savvy! Thank you for the heads up.

@ hfscomm1: I don't think I could be the queen of truth if I tried, but everyone I have dealt with has indeed loved their unit. For them it was the best of both worlds, something they own outright and something they can use only when they need it without their pocket getting hit tremendously.

We are diverting from the original topic though... I'm not saying that every hotel condo is amazing, nor am I saying that Trump International is the best thing since sliced bread (although it is for some people). I was just originally trying to break down (in a two year old post, but that was my mistake) the ownership structure.

It is easy to read about hotel-condos, something that is still relatively new to the market, and dismiss them. I spend a lot of time on the phone explaining that this is not a time-share or fractional ownership. And even then I need to send them lots of information and explain things in detail which I do with pleasure. You have the Plaza, Essex House, W Hotel, St. Regis, Trump International, Trump Soho and probably a slew that I'm not even familiar with. Each of these buildings have dramatically different price structures, renting programs, use restrictions and features. They are all 'hotel-condos' but to mention any of them in the same sentence is not comparing apples to apples. And @alanhart, if you want you totally can give either my father or I a shout :)

http://online.wsj.com/article/SB10001424052702304434404575149931117849668.html?mod=WSJ_mgmt_LeftTopNews

The hotel, which was announced on a episode of Donald Trump's hit television show, "The Apprentice," is another of the boom-time projects that looked easy to finance until the recession hit. Recently, Bank of America dumped a mezzanine loan on the project for a fraction of its $75 million face value, according to people familiar with the matter. Now, the developer is in restructuring talks with lenders who hold some $350 million in debt.

But sales of units in condo-hotel projects throughout the country have ground to a halt because it's so difficult for individuals to get credit. Instead, most investors would have to pay cash, and many are reluctant to do so when the overall hotel market is so weak.

The issues facing the building also provide the latest glimpse into how Mr. Trump has managed to navigate the economic downturn largely intact. As was the case with many of his projects over the past 15 years, he has invested none of his own money in the Trump SoHo. His deal with the developers, a venture of Sapir Organization and Bayrock Group, is primarily a hotel-management and licensing arrangement

How could you not realize this post was a dusty relic? It had to be searched from the graveyard of dead posts, and even years ago it hardly got any interest.

I have a hard time seeing how any 1/2-way decent independent financial advisor would ever recommend one of these things. It seems to have all the financial benefits of a time share.

Hotel Condos are by no means time shares. 1 Central Park West is probably the best implementation of a hotel condo out there. Trump Soho, as Riversider's quote touched upon, is a bit of a different breed. All in all, it does make sense (both personal and financial) for a select few to own hotel condos. It is literally the perfect pied a terre for an individual that doesn't want to lose money on a second residence (in NYC, obviously).

It all comes down to the price of the unit and what it rents for (and thus what it brings in). These numbers vary wildly between the different developments though, so yes, depending on where you go there is a possibility for you to get a bad deal. Like any real estate deal, knowledge is power, and if you are unsure of something you need to find out.

"By 2013 or 2014, Trump SoHo should be able to charge more than $600 a night for a hotel room, said Roland deMilleret of HVS, a global hotel consulting firm. But for now, he estimates room rates will be in the low to mid $400s."

I just checked and i could get a room at the Soho Grand tonite for $195. o i don't think Trump (which isn't exactly the best location), is going to sell out at "mid $400's", especially considering the increase in number of room sin the neighborhood once this place opens (Soho and Tribeca Grands combined come out to like 550 rooms?. Adding 60 Thompson and the Mercer only brings the total up to about 725?

I won't comment on price (it could go either way), but I will say this... none of those hotels have views like Trump Soho. Having recently been to the top floor, it's pretty impressive.

I don't believe the 120 day arrangement applies to all the condos at 1 CPW

@ sisphus: At 1 CPW you used to only be able to use your units for 179 days. Now you can use the East (Park) Facing units 365 days a year, the West (Broadway) Facing units are still 179 days but that too will change to 365 days sometime in the future. (And 366 on leap years!)

Mrussell-why the change? Is it that they are not being filled and are going empty anyway? I thought that there was some kind of provision with the city when it was first built that limited the use to 179. Here are two questions with the Trump at 1 CPW specifically-Could the owners with a majority or a super majority decide to 1) oust Trump management as the hotel operator? 2) Or, could they then vote to turn it from a hotel condo to simply a residential condo? BTW I've stayed there many times and it is among my favorite places to stay in the city. Service there is fanatastic.

"I won't comment on price (it could go either way), but I will say this... none of those hotels have views like Trump Soho. Having recently been to the top floor, it's pretty impressive."

I guess it's a good thing the units start on the 40th floor then. I'm sure when he said said "By 2013 or 2014, Trump SoHo should be able to charge more than $600 a night for **A** hotel room", he thought people would know he meant **A** hotel room ( as in one particular room ) on the top floor, even thought the average on the lower floors without views would rent for $275.

Based on the little I've read and my own gut feel, I cannot see the same hotel traffic or stay rates for Soho as one would find in Prime Mid town locations. I can't see this competing with the Mandarin or 1 CPW for that matter. The fact that Trump did not risk his own money on this project and merely is the licensed hotel operator seems to support my view. Condo hotel investors in this project are too leveraged to occupancy prices/rates for this to work in my opinion.

You also have to look at the EXTREME increase in HIGH END hotels in the area where "hip" people would want to stay vs what the demand has always been or can be increased to simply by overbuilding stock. The Crosby, The Bowery, The Rivington, The Cooper Square, The Mercer, 60 Thompson............

Not only has Manhattan in general been overbuilt for the coming economy, Lower Manhattan has been staggeringly overbuilt in comparison to historical demand.

Question for 30yrs- What is below the 40th floor at Trump Soho? Is it just simple hotel rooms? The apts at Trump Soho are also not as fully equipped as at 1 CPW...ie they don't have full kitchens just efficiency kitchens.

@ skippy2222: CORRECTION - CORRECTION - CORRECTION. I was incorrect about the West (Broadway) Facing units. The owner usage for those units will remain to be only 179 days from here on out, in explaining why I will also answer a few of your other questions. Back when Trump International was being built, the building was able to get a tax abatement (not 421-a) because there were very few hotels on the West Side in that area. However, because the city wanted to make sure that the units remained hotels, they required that a certain portion of their commercial space could not be used by owners for more than 179 days. So can they vote to turn it into regular condominiums? No. I'm sorry I provided you with incorrect information the first time around.

@ 30yrs_RE_20_in_REO: Trump Soho is made up entirely of hotel units. I don't quite understand what you mean by "good thing they start on the 40th floor." The first few floors are for a lounge, restaurant, etc, but from the single digit floors to the top, they are all hotels. The lower floors do have somewhat of a compromised view (looking at a building, etc) but if I remember correctly you have outstanding views in every direction from the 20th floor up (around that floor, it has been a little while since I was there). Even if you are in a lower floor room you still have the fantastic service, and if you are paying less then it is what it is. Either way, a vast majority of the rooms have insane views... I only wish I could have seen it at night.

@ Riversider: This isn't meant to compete with those buildings, just like someone specifically looking for an apartment in the East village probably wouldn't be looking on the Upper East Side. Additionally, when Trump International was built, the area, in short... sucked. When a huge new hotel & condo came in, the area started to change. The area that Trump Soho is in a similar situation. Aside from the few trendy bars, there isn't a lot going on over there and it too will change the area. The reason Trump didn't risk his money is because he is smart (this is not a debate on if you like the guy or not, it's just a fact). Why put your own money in when you can license your name and get paid. If the building does well, excellent, if it doesn't (which you could say is what is happening right now) you still make out like a bandit. The service in the hotel will be the same regardless, so at the end of the day, he managed to increase his brand and wealth without any risk to himself, I wish I could do that. The prices at Trump Soho, right now, are too high though. No way around that.

@ skippy2222: As I said above, below the 40th floor you have hotel units, the whole thing is a hotel. The rooms do lack the full kitchens that Trump International have though, which is a shame, but a smart move.

If you have read this entire post, you know that I actively sell units at 1 CPW. But the reason for these detailed posts is because, quite simply, a lot of people have misconceptions as to how hotel condos function (as a whole and in Manhattan). I'm an honest broker and I'll give you honest answers to the questions you have. I hope this info was able to help some of you.

Not putting in your own money means equals less upside and no downside. If I was bullish on a project, I would want full upside.

"@ 30yrs_RE_20_in_REO: Trump Soho is made up entirely of hotel units. I don't quite understand what you mean by "good thing they start on the 40th floor."

It was just a sarcastic remark about the concept that the Trump units would all get $450 a night while the Soho Grand was getting less than half that (not the rack rate, what they were actually renting rooms for THAT NIGHT) because the views were so much better at the Trump.

It was also a very obscure reference to what The Donald pulled at Trump Tower with the apartment numbering scheme.

"When a huge new hotel & condo came in, the area started to change."

a) Sucked? ....... ummmmm ......... no.
b) If you are trying to intimate that Trump International holds a significant percentage of the credit for improving "that area", I think you are WAY overstating.

"The area that Trump Soho is in a similar situation. Aside from the few trendy bars, there isn't a lot going on over there and it too will change the area."

Yeah, because in the current climate, developers, restaurateurs, boutique owners, etc. are suddenly going to risk tons of money there when they aren't even doing so in more established places. I remember when Javits was being built and there were all these claims that 11th Ave was going to be like Columbus ave with cafes, boutiques, hotels, etc.

"The reason Trump didn't risk his money is because he is smart"

or that he doesn't have any (at least not enough to put a large amount "at risk" in a big development)

Oh, and since I didn't notice any discussion of this yet: one of the important factor often overlooked is the agreement the unit owner must enter into regarding the rental of their unit when they aren't using it:
- does it contain "floor pricing" (i.e. can you rent it for any price you choose, or does the hotel management decide for you?)
- what fees are taken out of the nightly rental?
- are there any guarantees about units being presented to potential guests equally?
- can you refurnish your unit whenever and however you feel without restrictions?
- etc.

- does it contain "floor pricing" (i.e. can you rent it for any price you choose, or does the hotel management decide for you?)
The hotel can charge between the 'most favorable rate' and the 'rack rate.' You yourself can reserve your room and let someone use it at whatever rate you want. (i.e. You can rent it to your friend for $2 or $20,000 per night if you wish.)

- what fees are taken out of the nightly rental?
There are 'per use' fees which vary depending on the room (cleaning and taxes, etc). The minimum per night would be around $100 and it varies on the size of the room.

- are there any guarantees about units being presented to potential guests equally?
In a word, yes.

- can you refurnish your unit whenever and however you feel without restrictions?
No. The hotel sets the standard and you cannot deviate. In relation to your above question, it would be hard to rent the units with equality when each room is decorated differently.

These are all questions any buyer would have and should you have any more I invite you to ask as they most certainly benefit the post and anyone that is curious about hotel-condos.

MRussell-Do you know what the impetus was to change the formula to allow the park front owners to stay 365 days? What was it if you do know? Although I have stayed there and the service was great, as a potential investor, I always feel somewhat handcuffed if a management agreement is locked to a certain hotel operator? This begs the question 'Does Trump Management have the permanent lock on 1 CPW?' I did look into 1CPW years ago, and wish I would have invested then. Would have had some years of good and bad cash flow, but would have made a bundle in the equity. I understand the hotel condo situation well as I have one out west on a ski mountain which does very well.

"Is it a good investment? It depends on what you need it for. If you are an investor looking for a yearly return, the short answer is no. You will probably get a 5% return on your money, maybe more if you luck out."

a 5% return at 1CPW???
After you pay Common Charges, RET, and all the other franchising and marketing fees?

A 1 bdr asking $1,275M with $4,000/month (CC+Ret)
I think you should check better

@skippy2222: I'll have to get back to you a little later with that info, I'll find out for you. Although I wouldn't feel too handcuffed because of that sole reason.

@ highend00: Considering that I represent these listings, I would say it's safe bet that I did check. It is true that not all of the units will get that, especially this past year, but yes, it is quite possible. There are numerous factors that are involved with that number though, more than can be gleaned from simply looking at the asking price and monthlies.

I was looking to buy there 4 years ago as an investment and in my excel sheet I have considered all the costs based on two years of income and ALL the other expenses and fees that the broker gave me. It's pretty simple and there was no way to net even a 3% in a realistic scenario.
I cannot find that file anymore, but I am sure that you do have and know all the costs, if you want to share that here.

@ highend00: You may actually have been dealing with my father at the time, Doug Russell. If you email me (no reason to publicly show your email) I would be happy to give you a breakdown on all the units that I currently have. As I said, 5% is possible, but there are a few factors involved. My email is: mrussell@bhsusa.com

(Matthew Russell - Brown Harris Stevens)

Just to add to my comment though... Most people do not buy these units for 'investment' purposes, they buy them in lieu of purchasing a home in NYC that they have to pay monthlies on. The full paragraph, from which you are quoting is this:

"Is it a good investment? It depends on what you need it for. If you are an investor looking for a yearly return, the short answer is no. You will probably get a 5% return on your money, maybe more if you luck out. If you are someone who wants an apartment in the city with amenities but only use it every now and again then yes, it is a fantastic investment. Not only would you have an awesome place to stay when you are here, but when you aren't it will earn you money, typically paying off your common charges & taxes and then some. Additionally, the longer you hold your unit the more that it will be worth when you go to sell. That is where you will make a real monetary gain."

Buyers with money, don't want the hassle of storing belongs between stays. These buyers prefer traditional apartments. Condo hotels are securities and should be treated as such.

@ Riversider: I don't follow what you are saying. I'm not sure if you are aware of this or not, but there is an owner's closet in each unit. Most are walk-ins, and the ones that aren't are still quite large.

Yes, I've seen this, Mr. Russel. For buyers of means this is not something the typical buyer wants to do. Investments are investments and homes are homes. It's best not to confuse the two.

MRussell: If you haven't gathered by now, resurrecting this thread on here probably isn't a good marketing tool. The regular posters, many of whom you have met on this thread, are a pretty intense and financially savvy group. They differ on many opinions, but based on what I read so far on this thread, no one seems the least bit enthusiastic about what you are offering. In the future, anyone searching Streeteasy for "hotel condo" is going to come up with this thread and it won't help you. Continuing here will likely only make it worse.

I have to agree with Riversider: people a means would not generally be interested in a place you have to pack up all your things each time you leave. Add to that the very spotty return possibilities, and I don't think the argument to buy is compelling. Can you describe any ACTUAL annual profits in the building? Or at the very least, you should be able to share the guest (non-owner) occupancy rates and average price-per-night actually paid over the last two years.

What worries me most about your postings are the qualifying terms you use with "5%" such as "probably," "possible," etc. What you omit is that it is just if not more possible to record a loss I suspect. Focusing only on the upper end dream and ignoring the very real downside risks does't really paint a full picture.

Have to agree. the better argument would be to list some projections along with some IRR numbers. Interesting how that is never provided(and I know all about the SEC position on this)

rs: how exciting for you...not only did someone respond, but they agree with you!

quit while you're ahead.

columbiacounty, have you had anyone agree with you? aren't you still banned?

"The hotel can charge between the 'most favorable rate' and the 'rack rate.' "

Care to explain that in plain English? Sounds like when variable rate mortgages were based on "prime plus 2".

I don't need the breakdown per unit, could you just tell if any unit did actually get a 5% return after you consider all the expenses and fees or something close to that in the last 5 years?

http://www.hotelresource.com/article44031.html
Hotels in Manhattan:

It is remarkable to note that the upscale W Hotel in New York City at Union Square was sold (auctioned) for just two million US dollars. In essence, this means a 200-Room luxury hotel located at Manhattan, sold for the price of a well furnished condo? According to Dan Lesser, a professional real estate analyst with CB Richard Hills interprets the showing up of new tenants at hotels every night especially during recession when the hotel business went through very tough times.

Many real estate analysts feel that it is possible for the hotel business to recover if the U.S economy manages to effectively achieve 3/4th of economic growth. Of course the brow-raising deal conveys much more about the trend of the hotel business industry in New York City and Dubai from where the investor procured his invested amount.

The year 2005, the Landmark Manhattan hotel was sold for an estimated price of $73 million. Another acquisition was by one of the top real estate investment companies, HEI Properties from Connecticut that bought Algonquin hotel for an estimated $430,000 per room. The hotel is one of Manhattan’s oldest standing testimonies with around 175 rooms that bear credit for hosting many renowned celebrities.

According to a recent survey conducted on Feb 6th 2010 by Hogg Robinson Group, New York City, Moscow and Abu Dhabi host the world’s most high-priced hotel rooms. It is quite interesting to note that Russia topped the list for the year 2009 for offering most expensive hotel rooms in the world according to a recent study conducted by Britain’ Daily Telegraph. The hotel business saw a global decrease in room rates last year owing to unpredicted economic conditions. Undeterred, Moscow hotel charged as much as 420 dollars per night followed by Abu Dhabi with 360 dollars, on average.

In the year 2009, top business class hotels and luxury hotels in Manhattan had considerably lowered their prices. Hotels in New York City celebrated their success by bagging third position in the list of world’s most expensive hotels with 320 dollars one night.

The international business travel services group also confirmed the price-falling for most hotel rooms in top Cities during the second and third quarter of 2009. Also, during 2009 there were many offers and inexpensive travel discount coupons launched by operators to lure travelers and increase the scope of hotel business. This was just enough to even the costs to maintain the hotel in its standards as many people adapted “cost cutting” strategies.

During 2008, the estimated cost of a hotel room in New York City summed 420 dollars, which was higher by 25 percent from that of 2009! And the only other City in the U.S among the top most expensive hotels was Washington, at a cost of 290 dollars per room.

During June 2009, when the hotel industry in US was going through difficult times, Manhattan hotels recorded an astonishing 80 percent occupancy level increasing to 84.3 percent in July that is considered as the highest rate of hotel occupancy across the nation. A slight dip in room rates to one third to catch up with lost business by Manhattan Hotels, offers great potential or promise for hotel business.

According to John A. Fox, VP from PKF consulting, National Research and Hotel Advisory Company, New York offers great scope for investors now. When there was an average nationwide decrease in hotel room rate of about 9.5 percent, according to Lodging Analysts, this modest price rise was due to the soaring rate of Manhattan hotel room rates. Average national room rate during June 2008 was $97 per night.

Hotel industry in New York City experienced a serious setback during October 2008 when one of the top insurance giants, American International Group (AIG), spent over $500,000 on Orange County beach resort at California. This incident has sent signals to business class executives who exhibit reluctance in booking hotel rooms fearing congressional hearing.

2009 had 80% Occupancy and prices 25% below 2008.

I had no idea I would go to sleep and wake up to find this many posts.

@ kylewest: The day I got a streeteasy account, eight weeks ago, I commented on this thread, 'resurrecting it' if you will. At the time I didn't notice that it was that old. A few days ago someone ELSE resurrected it. Considering that I know a lot about hotel condos I consider it fair to respond. Yes, there are some people on this thread who are very savvy, and it is that very reason that I actually do take the time to respond. Several posts have contained questions specifically about hotel condos, and simply put, I'm answering them. Anyone looking up hotel condos on this thread will most certainly read this informative post, and if they can learn something then the more power to them. Just because some of the people on this thread don't like hotel condos, doesn't mean I cannot respond to them. You will notice that at no point have I ever posted a link to my listings or even my site, if I'm truly trying to sell these listings to you, I'm doing a pretty bad job.

I will continue to comment if people continue to seriously post. More information is better than too little in my eyes.

@ Riversider: If you were a buyer who wanted projections I would provide you with the last three years of financial information on a unit and let you know how other similar units have done as well as what other information I had about that unit.

@ 30yrs_RE_20_in_REO: Sorry about the lingo. Essentially, there is a minimum and maximum rate that the hotel can charge. The minimums are in the $200-range for some of the units. Prime is a variable, the minimum and maximums are fixed numbers.

@ highend00: 5% return based on what? I need to know what you paid for a unit in order to calculate your return.

@ Riversider: Hotel rates were down and so were occupancies. We just got out of a recession, would you expect anything less?

@ Riversider: Hotel rates were down and so were occupancies. We just got out of a recession, would you expect anything less?

I would expect my investment to provide an ROI

Mr. Russel
Let's hear some 12 month projections on Trump Soho? What can we expect?

you represented that it is possible to get a 5% return on your money, you have to explain what that excatly means and provide one single clear example, not me.

@ Riversider: Even through the recession the units made money.

I don't know Trump Soho as well (by any means), there is no history on the units, there are still numerous sponsor units for sale and the way the splits work with owner/hotel are different than they are at 1 CPW. My projection is: you can expect that people will want to stay in a brand new hotel with amazing views in Soho.

@ highend00: It all comes down to what you paid for the unit and how much you plan on using it yourself. That is the very short answer.

Fair enough, what are current NOI numbers for 1 CPW?

I mean ROI

My projection is: you can expect that people will want to stay in a brand new hotel with amazing views in Soho.

To be honest, you sound like a salesman

My job title is real estate 'salesperson'. And frankly, that is the best projection I can come up with. Riversider, I realize that there is no answer I can come up with for any of your questions that will not sway you from being a cynic. What do you want me to tell you?

Projections on a sample 1 cpw unit over the next 12 months.

@ Riversider: If you were a serious buyer, we could have a phone conversation that would explain everything you needed to know.

lol!

Whatever you want to say about Trump, he seems to attract very loyal employees. Most of the staff at Trump International CPW have been there since Day 1. They are very professional and treat the place like the jewel that it is. The Park views there are, I believe, better than any other nearby building, even 15 CPW, as all but 1 CPW have more of a setback, and most have smaller windows.

"@ 30yrs_RE_20_in_REO: Sorry about the lingo. Essentially, there is a minimum and maximum rate that the hotel can charge. The minimums are in the $200-range for some of the units. Prime is a variable, the minimum and maximums are fixed numbers."

So, in other words, if I purchase a unit with a minimum rental price of $300, and there are 50 luxury hotels on priceline, kayak, etc. renting similar units for $250, the Trump won't allow me to put my unit at market price and have them market it, I have to not only pay them the fees, but market my unit daily by myself? But, if I price it at the $300, they will "list it as available"?

So, in other words, your earlier answer of "- are there any guarantees about units being presented to potential guests equally?
In a word, yes." isn't really true, is it?

"@ Riversider: If you were a serious buyer, we could have a phone conversation that would explain everything you needed to know."

http://www.youtube.com/watch?v=4P-ccC1q35U

@ 30yrs_RE_20_in_REO: You are focusing on the most mundane aspects of this conversation. If your username holds any weight and you have actually been in real estate for 30 years, my comment to Riversider would make perfect sense. Would you want do deal with someone over email without ever speaking with them or would you rather have a serious conversation with them on the phone, or better yet, in person while showing them the listing you are discussing? I understand that Riversider is asking a lot of questions (some of which are good) but he is just asking questions to ask questions. There is enough information in this post that anyone interested in a hotel condo can probably figure out if it is for them or not. And if it is, they would probably give me a call and not ask important financial questions in a public forum. And on that note...

Seacrest out.

"Seacrest out."

Appropriate: you're on the wrong site.

And my questions aren't mundane, they are actually some of the most important questions one could ask. The days of selling dreams and BS and not numbers are over for the moment, especially when (as much as I usually don't agree with him), you're selling an investment here, so the MOST important questions are the one's regarding what might affect your cash flow. And, as far as most people here are concerned, the entire purpose of this DISCUSSION SECTION is to ask questions, even if they don't apply to exactly what that person is looking to purchase.

You need to go find a "marketing to purchasers" forum.

Or we can simply ask the masses: who has more credibility here as a broker? Who earned it?

I would be happy to talk actual numbers (that is what I do). This just isn't the place to go into that type of detail.

I have asked many times to give an example of a 5% return, but it's clear that you don't want to answer. It's a simple question, there is no need to explain what I mean. Listen, you advertise a 5% return here and honestly I think that you should be ready to go into more detail on the forum.

@ highend00: Historically speaking, owners will have a return in the 3% range. It is possible to get 5% but it is not the norm. At no point did I advertise 5%, I said it is possible. If you want specific financial information you will have to contact me, and I am happy to speak with you about it, but at no point will I be posting specific financial information on this board. I hope this answers your question.

If why is the range of possibility capped at 5%? Since it is an aspirational and not real number, why was it chosen? Why not say 10% or 25% is "possible"? In fact, if we're talking possibilities, maybe $1,000,000 annual return should be advertised. But most of us are concerned not with what is possible, but rather with what is PROBABLE.

My gut feel based on limited experience is that 3% is slightly optimistic assuming no debt. Many properties have seasonal occupancy swings and price structures.

a 3% looks more realistic, but it's probably still too high and while monthly costs are rising there is a lot more competition, so rents and occupancy could decrease.

So begs the question, If I wanted exposure to the condo industry, why invest in this, rather than buying stock in Starwood Hotels or another luxury operator?

yes Riversider, a 5% was really attractive but now that we know that it's possible to get a 3% (probably less than that) we should consider also other options.

My feeling is Condo hotels are very attractive for the developer who gets cheaper financing than going to banks. The buyers are really low cost financing with an unattractive upside.

Why not just buy shares in a hotel real estate investment trust?

These are proven as a disaster it seems according to the Wall Street Journal

NY REAL ESTATE RESIDENTIAL JULY 30, 2010.
Condo Tower In Sales Gulf
Trump SoHo Developers Try Direct Loans

By CRAIG KARMIN
The owners of Trump SoHo, facing sluggish condo sales that threaten the viability of the project, are taking the unusual step of providing direct financing in hopes of boosting buyers in the building.
The developers, Sapir Organization and Bayrock Group, are betting that by offering credit they can reverse poor sales in the upscale SoHo development. Only 20 of the 391 units have closed since that process began at the end of May.

With just 5% of the units as completed sales, other potential buyers could be driven away out of fear that the project could face financial problems.

"This additional source of financing shows the commitment of the sellers and the lender to this project," says Rodrigo Nino, president of Prodigy International, which is marketing the building.

The new offer marks the latest twist in a high-profile condo-and-hotel development on Spring Street that has been challenged by a number of political and financial issues.

Donald Trump hasn't invested money in the project but his company, the Trump Organization has a licensing and management agreement that allows the development to use the Trump name. The deal gives Mr. Trump and his children, Eric, Ivanka and Donald Jr., an equity stake of about 18% in the project.

The elder Mr. Trump couldn't be reached for comment.

While the Manhattan market has recovered slightly, sales at the Trump SoHo have been particularly difficult. Under the zoning rules that allowed the project to move forward, condo owners are permitted to stay in them no more than 120 days a year. On other days, they're part of the hotel operation.

That has limited the universe of buyers interested in the units, which start at $1.2 million for a studio, to investors—not people looking for a primary residence. The zoning rule also has made banks more skittish about financing condo sales. Almost all the condo sales so far have been all-cash deal, Mr. Nino said.

The Trump SoHo owners said they couldn't elaborate on the financing program since details were still being worked out.

But other developers and real-estate attorneys said sponsor financing isn't common but has sometimes served to supplement an existing bank loan that is for less than the amount needed to complete the purchase.

The hotel has "more than 300 rooms" of the 391 condo units available for guests, says David Chase, the hotel's general manager. He says that the hotel staff has expanded to 400 from 320 when it opened in April and that revenue so far is about 30% ahead of internal forecasts.

The Trump SoHo developers are facing pressure from more than $250 million in construction loans held by iStar Financial. Despite the success of the hotel, condo sales have to hit a certain level for the project to succeed financially.

Andrew Backman, a senior vice president of investor relations for senior lender iStar Financial, said, "while there are still details being finalized, we are happy with programs that help facilitate closings."

Bradley Burwell, a hotel analyst with CB Richard Ellis, thought the sponsor financing wasn't without risk but a worthwhile effort to get stalled sales going.

"The benefit of getting units sold outweighs risk of offering finance other lenders wouldn't take," he says.

The 46-story Trump SoHo has been criticized by local residents for towering over the rest of the neighborhood.

Donald Trump Jr. has maintained attitudes have changed since the project's completion.

Write to Craig Karmin at craig.karmin@wsj.com

@jonwarner15: Trump Soho is overpriced (and they will negotiate heavily because of it), they don't give the owners a decent cut and there are fees that come off the top which you won't find in other buildings. At no point did I say that I represent anything in Trump Soho or did I make a blanket statement that ALL hotel condos were great (1CPW is one of the few that actually does it right).

I represent units at Trump International Hotel and Tower. They share the trump name, and that is about it. For the owners of 1CPW, it is financially structured in a completely different manner and they come out on top because of it.

This has been a paid advertisement.

Alan, I have made it abundantly clear that I sell real estate; In case you didn't notice, this is a real estate website. Few people in Manhattan understand, let alone specialize in, hotel condos. So when someone asks a question or makes a statement, try not to be surprised when I respond.

I'm not so sure that people will view two towers named Trump differently based on some differences in the financial structure if ultimately it is a Trump project and both are condo hotels. The condo hotel barely seems like the right way to put money into real estate. It isn't an investment and it isn't a home. It could end up costing you more than you expect.

Probably when it opened in 1997, at the start of a real estate book that lasted 10 years or so, it was a good idea because at the time there weren't so many condos in Manhattan. But within that 10 year period a significant amount of condo building occurred in Manhattan, making 1 CPW but a handicapped property. Add to that that the building isn't new because it is the former Gulf and Western building from the 1960s.

It is likely that Trump Soho did it no favors, and the Trump Soho highlights the fact that Trump doesn't always sell and condo hotels far from equate with a good place to park investment dollars, moreso in today's environment. The fees alone when you realize your mistake and want to sell should be enough to make a buyer think thrice.

at the start of a real estate booM that lasted 10 years

Actually, these kind of remind me about gold.

I see the commercial on TV, and their selling proposition for so-called investing in gold is that over the last ten years, gold has gone from $300 per ounce to $1200 per ounce. So it is a great 10 year investment. Historically.

Today the NY Times talks about a lawsuit at the project.

warning:

mrussell's advice and wisdom on this site will be offered only if it furthers his ambition re real estate: that he make money

his posting is not altruistic

in case all hadn't noticed, he is a real estate salesman

wbottom: I respond to peoples questions to hopefully provide them with good information. This is a message board where people ask questions all the time and most of the time people reply with good insight, hopefully helping the original poster. If there were no real estate brokers on here, a majority of what you read here would be wrong or somewhat incorrect, and the whole StreetEasy community would suffer.

When it comes to hotel condos, few people have a good grasp on how they work, and when I saw this thread (many many moons ago I might add) I figured I would answer some general questions. Since then, pretty much every follow up post has been to either attack me for being a real estate broker (something I don't exactly hide) or to basically state that every single hotel condo is a terrible investment (and yes, just like any real estate, some are!).

It is a shame that it is coming to this, but I will not be posting to this thread any more.

MRussell: Wbottom clearly didn't read the thread. You very clearly stated you position here. I don't think there is need for you to leave this thread or any other. It is a free, open, unrestricted site. Any intelligent reader can surmise the intentions of any RE professional as long as the professional status is announced. You have been very forthcoming on that front and you have every right to post your professional observations.

Thank you for the kind words apt23. The fact of the matter is that I have pretty much already said everything that needs to be said about hotel condos. If anyone was actually interested and could stand reading this entire thread, they would have a pretty good idea as to what they were about and if they could potentially be beneficial to them. That would probably result in a phone call or email to actually start a real discussion about units that were currently for sale, either units I represent or otherwise. It isn't like so much has changed that I need to keep checking in, and at least 4 out of every 5 posts is either somewhat off topic or a repeat of what was said months ago.

If someone has a genuine question, they can email me at mrussell@bhsusa.com and I will provide the same neutral information that I post to this board. People call me all the time asking if hotel condos are something they should consider and based on their situation, I will tell them yes or no. I would rather tell someone not to buy a property (regardless of who represents it) than to just to a deal and not consider the repercussions it could have down the line. So far that has worked out pretty darn well for me, and I don't plan on changing.

Yeah, MRussell. Please don't go anywhere.

A question regarding 1 CPW. I saw there are some rentals available. Am I correct to assume that for the most part these are not subject to time restrictions?

Trump International Hotel & Tower (at 1 CPW) is actually two buildings. You have the hotel, which goes to the 17th floor, and the tower on top of that, which is a straight condominium with huge floorplans. Any rentals you see will be in the tower and will probably be subject to a 1 year minimum for a lease.

Just so you know, the hotel units are all numbers, where as the condos are numbers with a letter. For example: unit 614 (all numbers) is the hotel. 26D (numbers + letter) is the condo. That is a pretty easy way to know which is which in the building.

Lastly, there are two entrances, if you were facing 1 CPW, the condo entrance is on the right, the hotel is in the middle and Jean Georges is on the left.