What are the rental splits for condo hotels?

When you own a condo hotel and agree to place your unit in the hotel rental program when you're not using it, then you are entitled to a percentage of the revenue your unit generates. Rent revenue splits usually start with 10% coming off the top for management. (I’ve seen this number as high as 12%). Then, the balance is split between you, the unit owner, and the developer of the project. While the most common split is 50-50, rental splits do vary between properties. Sometimes they even vary within the same brands. Developers will sometimes choose to give unit owners a higher percentage to induce them to buy at their property over another. For example, in both Trump condo hotels in Fort Lauderdale, the split is a rather healthy 70-30 favoring the unit owner, but in Baja Mexico, by comparison, the Trump offers 60-40. One more thing, usually there is a fee of about 5% held back from your share of the rent revenue to cover future room upgrades and renovations. This money is held in an account for you, to be used specifically for your unit so that bedspreads, carpet, drapes, etc. will always be maintained at 4-5 star quality levels.

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 CondoHotelCenter which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.