Pre-sell condotel units before acquiring or purchasing existing motel

[quincy]

Thank you again. I do appreciate this.

Currently it runs as a straight motel, so not long-term. It would continue as such to guests whenever an owner of a unit puts it into the rental pool, and they are not using it for themselves.

I have been redesigning the units in renderings.

Thanks for answering my question. You don’t have to worry about displacing any tenants at the motel then, so that is one complication avoided.

Good luck.

 

[Martin Mark]

Thank you, Quincy.

I received a suggestion of using "fractional rights". Would use of fractional rights combined with this possibly be worthwhile? If so, would using fractional rights here still let me retain full ownership of the building and land itself (separate from the individual condo units within owned by each buyer)?

 

[quincy]

Thank you, Quincy.

I received a suggestion of using "fractional rights". Would use of fractional rights combined with this possibly be worthwhile? If so, would using fractional rights here still let me retain full ownership of the building and land itself (separate from the individual condo units within owned by each buyer)?

You should discuss this and your other ideas with a real estate attorney in New Jersey.

With fractional ownership, the asset is shared. Fractional ownership could be something to consider but, like timeshares, the idea can sound better on paper than in reality. It is easier when there is a single shared asset (like a beachfront home) but, when you have several separately owned condos, and shared ownership of the property upon which these condos sit, you could find it a challenge to make all of the owners see things the same way. And financing can be difficult.

 

[Martin Mark]

Quincy, thank you. That all was a concern to me, so your information helps me.

 

[STEPHAN]

I received a suggestion of using "fractional rights"

It is almost impossible for a buyer to get this financed.

 

[quincy]

Martin Mark, you might want to take a trip to Long Beach Island and speak to some of the several owners of motel-to-condo conversions purchased with fractional rights, to see what they think of their arrangements. These conversions appear to be fairly common there.

And here is a pretty good article (with additional links) published recently by the National Association of Realtors on fractional ownership: https://www.nar.realtor/fractional-interest-ownership

 

[kimcara94]

Embarking on a condotel venture requires a meticulous legal approach. Consult with a real estate attorney to draft a comprehensive agreement outlining terms, conditions, and timelines for pre-sales. Clearly define the location details, providing as much information as possible without jeopardizing the deal. Structure the agreement to safeguard buyers' deposits until the property acquisition is complete. Building trust and transparency with potential buyers is crucial. Leverage legal expertise to ensure your pre-sales strategy aligns with local regulations, protecting both your interests and those of future unit owners. This approach fosters a secure foundation for a successful condotel project.

 

[quincy]

Embarking on a condotel venture requires a meticulous legal approach. Consult with a real estate attorney to draft a comprehensive agreement outlining terms, conditions, and timelines for pre-sales. Clearly define the location details, providing as much information as possible without jeopardizing the deal. Structure the agreement to safeguard buyers' deposits until the property acquisition is complete. Building trust and transparency with potential buyers is crucial. Leverage legal expertise to ensure your pre-sales strategy aligns with local regulations, protecting both your interests and those of future unit owners. This approach fosters a secure foundation for a successful condotel project.

AI has its uses but, when used to answer a legal question, you should include the disclaimer that AI generated some or all of the content.