Condo/Hotel Appraisal

[Keith Walker]

Does anyone have any experience in the appraisal of condo/hotels? If so, are they prepared on the 1073 form like any other standard condominium? I have plenty of experience in the appraisal of high rise condos but I have not tackled a condo/hotel yet. Hope this is not a stupid question but I just want to be sure I approach this the right way and that I am qualified to do the assignment.

 

[Keith Walker]

anyone?????

 

[Ms. Janet]

Keith,

Condo Hotels aren't eligible for financing through some lenders............I'd make sure your client knows it is a condo hotel before you put much time into it.

 

[Ted Martin]

I'm curious about these things too. I just heard an ad targeted at investor / buyers on the radio. We don't think we have any of these back home so it got me thinking. Is this just another way of saying time share?

It doesn't seem reasonable to me to do these on a form since the typical investor / buyer would be giving greatest weight to the cash flow from the rental.

 

[Dave Smith]

We have a number of condo hotel projects in my market so I have appraised several hundred condo hotel units, starting in the mid 1980s.

Just use the standard 1073 form. Be sure to discuss the condo hotel aspects of the project with your client. Condo hotels will only qualify for a fixed rate if a private investor is involved. Fannie and Freddie will not become involved with condo hotels. You will need to use condo hotel sales for comps because using residential condo units for comps would be comparing apples to bananas.Both are fruit but they are very different kinds of fruit.

The income approach works well for these units if you can get the gross rent figures from the condo hotel management. Also, be very careful about the personal property, furnishings etc. They are usually included in the contract price but we don't appraise furniture. At least I don't.

 

[Keith Walker]

I appreciate the help!

 

[Keith Walker]

Dave,

What you said makes complete sense to me and confirms exactly what I was thinking. The condo/hotel project is the first in the city to my knowledge. There are others coming online but as far as I know there won't be any condo/hotel comparables as any are yet to close from any of the new developments. Obviously that means no sales or income comps. The reality of the situation suggests that I would only be able obtain pendings from my development as other projects will most likely not release there information until sales have actually closed. It's quite the conumdrum! If anyone has any ideas, I am open to them!

 

[Mike Boyd]

condo/hotels

Is the project primarily a hotel where they sell some of the individual suites as condos which they rent out when the owner is not using it? Or, is it primarily a condomininium project where the suites are offered for rent from time to time? This may sound like the same thing but, IMHO, it is the primary use that dictates the type of report. If it is primarily a hotel, then you have to appraise the entire project which would be a commercial appraisal requiring a general license. If you are appraising one, individually owned unit then you would appraise it as a single condo and include the GRM approach to value by taking the annual income (supported) and dividing it by 12 to get the monthly gross rent.

 

[Keith Walker]

It is primarily a condo project where the suites are rented. Of course owners and renters have full access to all hotel amenities and it is completely furnished. I agree with you about the GRM. Problem is, I don't have any market data as this is the first development of this type to the best of my knowledge.

 

[Keith Walker]

I don't think i made myself entirely clear. This project is under construction so there are no internal rents at this point.