| The SEC has legitimate concerns about some | | | | simple real estate. To attempt to ignore the |
| condo hotel developers selling units in their | | | | rental income potential and make their |
| projects based solely on the 'forward looking | | | | purchase more like a second home or vacation |
| investment potential'. If developers were | | | | residence. But the income potential is still |
| left unchecked, with a pile of spreadsheets | | | | a large part of the decision. When the |
| touting income potential, every condo hotel | | | | consumer is told by the real estate sales |
| unit in the country might cash flow at | | | | representation that they cannot in any way |
| remarkable levels, on paper, and every small | | | | discuss income or income potential, time and |
| real estate investor would have a PhD in | | | | again the consumer feels something is being |
| condo hotel lingo. This is the fear.I believe | | | | withheld. I have witnessed as the potential |
| we are not giving the consumer enough credit, | | | | condo hotel buyer asks "why?"The consumer |
| but I understand the fear. ADR, Occupancy, | | | | deserves an open dialog about risks and |
| RevPar, the language of the hospitality | | | | rewards in condo hotel ownership. Attempts |
| industry can appear sexy at first glance. | | | | are being made to create a firewall between |
| Nightly rates, rack rates and Average Daily | | | | real estate sales and hotel rental management |
| Rate (ADR) can vary widely. Occupancy at a | | | | departments but it is still disjointed and |
| hotel has so many variables. Hotel management | | | | spooks consumers trying to understand their |
| is one part science, and one part art, but it | | | | purchase decisions.As CPAs, financial |
| is all business. Real estate salepeople and | | | | advisors, bankers and other trusted |
| developers are not licensed to sell business | | | | consultants better understand this new real |
| interests and this is the crux of the | | | | estate product, its potential and risks the |
| dilemna.SEC rules require that securities or | | | | gap in the information for the consumer can |
| business interests are sold with complete and | | | | be bridged.Bob Waun |
| proper disclosure, but disclosure is such a | | | | |
| slippery slope. Afterall so many other real | | | | CEO |
| estate properties are sold for their | | | | |
| investment potential, like apartment | | | | Vacation Finance |
| buildings and warehouses, why are condo | | | | |
| hotels treated more conservatively?Consumers, | | | | Vacation Finance, America's First Second |
| while on vacation, buy condo hotel, not savvy | | | | Home Lender is an innovator in condo hotel |
| seasoned investors. Again, I think we are | | | | mortgage lending and has been a leader in |
| giving the consumer far too little credit and | | | | educating consumers and developers in the |
| information.Consumers who look to purchase a | | | | risks and rewards of this new product. |
| condo hotel, are told to consider it just as | | | | |