Have you always wanted to buy a condominium unit that you can rent out? A lot of money, after all, can be made from leasing out a property, even if you live abroad or pursue a daytime job.
Maintaining a unit, however, can be quite a headache especially to a new homeowner. Plus, there is always the pressure to maintain a constant, paying tenant to ensure your steady income. Truth be told, it isn’t easy to rent out condominium units.
One local developer, however, has found a way to ease the troubles of condominium investors. Its solution? The condotel.
It’s not an entirely new concept, but it has so far proven to be one smart investment option that will allow you to earn passively from your property. Condotels — coined to mean a condominium with hotel units and facilities — offer the ease of owning a rentable unit stripped of the usual challenges and headaches. Sta. Lucia Land is among the first ones to introduce this concept in the country and bring it to provinces where real estate is now thriving.
As its name suggests, a condotel is a cross between a residential condominium and a hotel. Like the typical condominium, a condotel’s ownership is shared among unit owners. The owners take care of the purchase, taxes, repairs, insurance fees and association dues.
The condotel, however, is different from its residential parent because it involves a rental agency, which takes care of housekeeping, marketing and bookkeeping. The team also manages the reception desk and customer service, similar to a hotel setup.
In terms of profit, the owner and the rental agency split any earnings made in renting out the units. The division of income depends on the parties involved. Generally though, the entity that takes in more income have more responsibilities.
As mentioned before, a condotel splits the responsibilities between the owner and the management. If you have the capital to invest in a rentable unit but you don’t have the time to maintain it, the condotel is perfect for you. In addition, you won’t have to worry about finding renters as the agency will take care of that for you.
Simply put, investing in a condotel allows you to own and earn from a rentable space without much hassle.
While there are some condotels around the world that are located in urban centers, surprisingly, these building types find the most customers in vacation areas.
Resorts, beaches, and other tourist spots often host the most successful condotels. There are those, however, that find popularity in cities and suburbs. Usually, these units cater to transient visitors and balikbayans craving for some pampering during their short stay in the area.
Today, if you travel around the Philippines, you’ll find condotels in a variety of places. They exist in busy districts such as Makati and Manila, and as well as in scenic spots such as Tagaytay. While they may be widespread now due to their success, a certain developer helped make the concept successful by bringing condotels across the different Philippine islands.
Pioneer of convenient leasing
Sta. Lucia Land Inc., a developer whose parent firm has been in the business for more than 40 years, can be credited for being one of the first companies to offer condotels to budding investors. Mainly focusing on the market of overseas Filipino workers (OFWs), the company provides condominium owners a chance to earn from their units with little stress involved.
Sta. Lucia management group general manager Imee S. Yu earlier said that a condotel investor can earn as much as 11 times on his unit compared to placing his money on a savings account. This amount holds true even if the hotel has a low occupancy rate of 35 percent. While some of the earning may go to expenses such as insurance, association dues, and the like, condotel investments have proven to be profitable for owners based on Sta. Lucia’s existing operations.
To date, the company manages a number of condotel projects across the Philippines including two in Mactan, Cebu which are the Sotogrande Hotel & Resort and La Miranda Hotel; Splendido in Tagaytay; La Breza Hotel in Quezon City; and Stradella Hotel in Cainta, Rizal, among others. More projects are expected to rise in the near future such as SotoGrande Palawan, a six-storey development of 147 units located alongside the National Highway.
While Sta. Lucia primarily markets its condotels for investment, unit owners will be allowed to stay for 30 room nights a year in their units provided arrangement has been made beforehand.
Once an investor has bought a unit, he will have to enter a 15-year leaseback agreement with the hotel operator. Through this contract, the owner will be entitled to earn from the rentals of his unit depending on his floor area size. Once the 15 years are up, Sta. Lucia will provide new furniture to your unit and you are finally free to use it as your permanent home.
With real estate in boom, condotels appear to be the best new investments to be made for the future. Whether you’re an OFW, a soon-to-be-retiree or just someone looking to earn cash by renting out, buying a condotel unit is a wise move.
You get to reap the profits and at the end of 15 years, you also get to enjoy your investment. All of these are possible without having to endure the headache of maintaining and servicing your units for guests. It’s a win-win situation that can prove to be your best investment for life.