I'm concerned that the capital value or resale value of a condo-hotel unit would be tied to its annual return. I myself am more interested in a capital gain as in a more typical real estate investment. Do you think I'll have trouble reselling because of the return issue?

No, I don't, and the reason why stems from the way we see the developers marketing their condo hotel properties. The developers will never discuss the return on investment that a buyer can receive from the rental of their condo hotel unit. They do not tout the return as a big benefit, even though for many buyers it is. Instead, the developers will only focus their sales pitch on the building's fine location, superb amenities, top notch management and the expectation of long- term appreciation. These four factors remain unchanged whether your unit is rented out 365 days a year or not at all. Imagine if you were comparing four identical units available for re-sale. One is used by an Austrian businessman for roughly six weeks a year, at random times. The second is used by a British family for one month during Christmas and a few weeks around the July 4th holiday. The third unit is sold to some elderly New York snowbirds who use their unit for six months out of the year. Finally, the last unit is sold to a Latin American who bought the unit as a way to get funds out of his country and into the safety of U.S. real estate. However, he rarely ever uses it and he chooses not to put it into rental program. These four examples are typical of real condo-hotel buyers. Now if you as a prospective buyer come along and try to determine the value of someone's unit based on the rental it generates, even if all four units are identical, your return numbers will all be different. On the other hand, if a studio unit was purchased for $325,000 in 2001, and it is on the market competitively priced at $440,000 today, you can get a better feel for the real value of the property this way, than by the income it may have generated. Bottom line, the emphasis on condo hotels as an investment has and should continue to be on the potential for long-term appreciation. The fact that you may receive some rent revenue that can help defer your mortgage or maintenance costs is best considered an added bonus.

The above question was submitted via e-mail by a visitor to www.condohotelcenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.