Key Takeaways
- A condotel is a hybrid of a hotel and condominium in which a person owns a unit but also rents it out to vacationers to earn a passive rental income
- Condotels are vacation homes for short-stay visits that offer hotel amenities, plus a chance to generate some passive income.
- Buying a condotel can be a risk with lots of fine print that varies by property. You also need to consider certain facts about the hotel before buying a condotel inside.
- You can’t use traditional financing to buy a condotel; the best way is to buy with cash upfront.
Definition of a Condotel
A condotel is a hybrid property between a condominium and a hotel that lets owners enjoy the unit or room along with all the property or on-site hotel amenities themselves whilst earning and generating income by the hotel booking the unit to guests as a short-term stay.
Do you want to own part of a hotel or just enjoy the benefits of living with a hotel experience whilst generating an annualized income? If yes, then a condo hotel could be the right investment property for you, but before you rush in and make an offer on a condo, let’s take a look at some of the other important facts to consider.
Let’s get into talking about what a Condotel is and why you might consider buying one.
The Thailand property market has seen its fair share of ups and downs in the last 10 years; however, one thing can be said for certainty: investing in Thailand’s property market has more perks than cons.
For instance, condos for sale in Bangkok are relatively affordable for such a popular city for tourists and business transactions. Condos in Bangkok can be owned legally by foreigners whether you live there full-time or use the property occasionally.
The cost of living in Thailand is a lot less compared to other destinations around the world like Hongkong and Singapore which leads a lot of investors from Asia to buy in a neighboring country like Thailand.
Condotel example that you can buy in Bangkok for a better idea.
See Example
These two examples are both located in Bangkok, Thailand and both with incredible views of the city.
Take a look at both properties, and you will get an understanding of what is included when you buy an apartment or unit in a Condotel in Bangkok
What’s the Difference between a Condotel and a Condominium?
Despite having very similar names, condominiums should not be confused with Condotel.
However, we have found that some do so we have highlighted some key differences between them below.
| CONDOTEL | CONDOMINIUM |
|---|---|
| You can generate short-term rental income from guests of the hotel. | You cannot really rent out short-term profitably. |
| Includes housekeeping, concierge, and other hotel amenities. | You might have some shared amenities like pools, gardens & saunas etc. |
| Are not backed by conventional mortgage loans. Pay cash typically. | You can use traditional homeowner loan programs to purchase a condo. |
| You purchase a Condotel as a vacation home for a short-term stay. | Can purchase as a primary residence or a second home or rent your condo out. |
| The unit comes fully furnished with very little flexibility to personalize. | As a Condo owner, you have full control of the interior style and design and what happens. |
Understanding the Condotel Concept and How It Benefits Investors.
As a foreign buyer who wishes to purchase a property in your name under a freehold title deed, you have more than just 1 option available to buy a condominium unit in Thailand.
As an investor, you can also choose to purchase a condotel, which is a hybrid of a condo but with the 5-star facilities of a hotel. This directly implies that the property is owned by a chain of hotels, and under the condominium act, a few condotel units from the property are sold to foreigners.
A condotel investment gives buyers the vast benefit of living in the best 5-star properties without having to pay for additional facilities such as a concierge desk, wake-up calls, laundry service, and upkeep of the room while being able to enjoy the common facilities such as swimming pools, full-fledged modern gymnasiums, and sports courtyards.
Unlike personally owned condominiums that are sold by condo developers normally as part of a residency project, the condotel concept is a commercial business deal.
A condotel investment is for serious property investors who wish to let the property back to the hotel for the majority of the year to other hotel guests, and in return you earn a passive income on your investment.
Are Condotels A Good Investment For Foreigners?
Are condostels a good investment for foreigners? Yes, but for a certain property investor. If you are someone that has unused investment funds and are looking to buy a condo, then a contel might be something to look into to earn a positive ROI of 5% or more a year while keeping invested in the property.
How long can I stay in a Condotel if I own it?
Condotel investors who invest in condotel hotel options are usually capped at 7 – 21 days per year, though this does vary from hotel to hotel and country to country, so make sure to do your due diligence on the condotel before purchasing. If you are expecting to be able to live there got the majority of the year, you may be more inclined to buy a condo instead.
A condotel is definitely not to be used as a main living residence as you would not keep personal belongings there all year round. Treat a condotel solely as an investment where you can start for a period of time to enjoy the location but also reap the financial rewards of the income that you will receive by the hotel booking the room or apartment to another guest.
What are the advantages of condo hotels?
An interesting fact about Thailand’s property laws is that privately owned residency condo units cannot be rented out for the short term by both Thai and foreign owners through Airbnb and similar hotel schemes.
The main reason for this is that these residency projects do not have a commercial license, and the condominium act prohibits short-term rentals as it is unfair to the trade laws of the kingdom.
The trade laws and hotel acts are in place to protect hotels as well as neighboring condo owners that may otherwise be inconvenienced by short-term rentals in private residences.
That being said, commercially built condotel units are perfectly safe to purchase and rent out back to the hotel by foreigners. There are no downsides to owning such units, especially for foreigners who do not plan to use this as a permanent place of residency while in Thailand.
Noteworthy Benefits of Commercial Condo Ownership by Foreigners
- The owner of the commercial condo unit is legally permitted to rent out the purchased room back to the hotel, with tax breaks and benefits as applicable by Thai and their home country laws.
- A full-fledged managed property solution offered by the 5-star hotel for the upkeep of the commercial condo unit. The managed property solutions include check-in to check-out services, upkeep, maintenance, repairs, and furnishing facilities.
- An example of a Condotel Bangkok property that offers the best 5-star facilities is the Ritz Carlton Duplex Luxury Condo in Bangkok. With 2 large bedrooms, 1 inbuilt study, and 3 ensuite bathrooms, and perfectly decorated by a top designer, this commercial condo unit is the perfect investment opportunity for serious businessmen.
- Beneficial and attractive rental programs for foreigners who stay in the condotel for a short duration every year and let it out back to the hotel chain for the remaining months every year.
- An example of a rewarding condotel unit is the Bangkok Muniq Lang Suan Condo Penthouse. This super luxurious and spacious 3 + 1 bedroom unit also has 4 bathrooms that are well decorated and fully fitted for bathing, relaxing, and letting loose all worldly worries. A private kitchen, sky garden, and amphitheatre are some of the many perks offered within the walls of this super luxurious condo unit.
- Choice of other guaranteed returns or entering a sharing pool, wherein the foreign condo unit owner receives a fair share of profits for renting out the unit back to the hotel chain. The sharing pool also pays the condo unit owner for any revenues the hotel has earned in common spaces and common amenities offered by the hotel to other guests.
- An example of a perfect, fully fitted condo unit that pays for itself with time is the Bangkok Penthouse Condotel in Munich 23. This spacious 3-bedroom, 3-bathroom commercial condo and penthouse unit offer immense returns through common area use for the owners. The common areas include a large swimming pool on the roof with a full-fledged jacuzzi system and a fully functional gymnasium with some of the best health machines. Additionally, automated car parking facilities and easy access to the BTS Sky train line with panoramic city views of Bangkok as well as the skyline are additional reasons to seal the deal.
- Commercial condo units are built at attractive locations, offer the best room service facilities, and also provide additional perks such as living in a high-rise building with panoramic city views and the best furnishings money can buy as the hotel has to keep up their standards even for condo units.
- An example of the most attractive and high-rise show condotel property in Bangkok is the Luxurious Ritz Carlton Show Unit. With 3 well-decorated bedrooms and 4 bathrooms with the best shower and bathtub fittings, and with pristine views of the Bangkok Skyline, this show unit can be beneficial to foreign commercial condo investors.
