Flipper Alert: Get Your Hotel/Condo at Trump Tower: 401 N. Wabash
I last chattered about Trump Tower in February, when the sales center was touting the first successful flip of a recently closed hotel/condo unit on the 21st floor. From the Sun-Times:
The sale “shows that there’s a resale market, and that’s good news,” said Tere Proctor, who is sales associate for Koenig & Strey GMAC Real Estate and directs Trump’s sales. She said the sellers “did quite well” on the unit, but wouldn’t get into specifics.
The flipped unit was Unit #2110:
- Closed on Feb 22, 2008 for $438,000
- Closed on Feb 28, 2008 for $890,000
Clearly, the seller already had a buyer lined up before the original closing.
I haven’t found any other successful flips in the building (but if anyone knows of any- please send me the info.)
But that doesn’t mean other flippers aren’t trying to sell. And they seem to be hoping for massive profit.
Unit #2430: 675 square feet hotel room
- Sold in March 2008 for $540,000
- Currently listed for $899,500
- Assessments of $1213 a month
- Coldwell Banker has the listing
Unit #2322: 1 bedroom, 2 baths, kitchen, 1200 square feet
- Sold in March 2008 for $687,000
- Currently listed for $1.15 million plus $80k for the furniture
- Assessments of $1541 a month
- Koenig & Strey has the listing
I don’t believe there is any parking with these units. It’s available daily in the building however.
I guess this shows that there are still crazy people out there. Of course, I don’t know what kind of revenue these things can generate. I’d like to see the numbers. But it just doesn’t smell right.
What’s your cut if someone stays in your hotel room? Also, if competing against rooms owned by Trump, does that hurt your chances of generating revenue?
If he can find suckers to buy these its perfect for the Trumpster.
Its basically guaranteed extra capacity for his hotel rooms in peak periods that people pay HIM for the privilege of providing him.
The Trump website implies nightly room rates vary between $347-1875/night. That is for mid-week in July, and I’d expect there to be some seasonal variability based on demand.
Obviously, the quality as an investment is highly dependent upon hotel occupancy rates, which in turn is dependent upon not only the broader economy but also the local market inventory of hotel rooms, which is presently expanding rapidly. I wonder if the investor paid such a fortune for the room on the optimistic hope that downtown Chicago occupancy rates stay as high as they have been for a while.
As with anything in real estate, the low hotel vacancies is causing a rush of hotel investment, meaning inevitably the supply will be majorly overbuilt (I’d guess by sometime in 2010, particularly if the nearby and immense Waldorf=Astoria or Mandarin Oriental are built as planned).
Condotels are a bigger scam than timeshares. They cannot make money except by flipping them to the next sucker in markets where property is increasing in price 20%+ per year. That time is past, and whoever owns the unit now is stuck with it. The monthly rental income cannot come close to covering expenses considering the purchase price. And needless to say, the hotel won’t be renting out anyone else’s units until all of their regular rooms are full. Why anyone though they would ever make money on this is beyond me. I guess they just fell for the hype.
I can imagine a potential market for corporate buyers (who can call the purchase price and maintenance fees “business expenses” and commensurately reduce taxable income), or for people who are so wealthy that they’d like their in-town haunt to also be a luxury hotel.
Not sure how big these potential markets are, but at least a few people might think a condotel makes some sense.
$80k for the furniture of a one bedroom apartment, what else is there to say?
The deal on unit #2110 smells like a non-arms-length transaction to me. Someone painting the tape?
John
THEY ARE ALL MAD!! CRAZY PEOPLE!!
The 80K for furniture is more laughable then the price if the hotel condo. If anything, the furniture has depreciated over time.
Didn’t Trump have a first tier of special buyers who got special pricing? I forgot who these special buyers were.
It became a status thing to buy real estate, and for some, a piece of Trump real estate. Sad, now we pity them even more now… At least with a timeshare, you are only paying for a fraction, with the condo hotel you’ll be paying and paying and paying. I’ve always said, if you want to get into the hotel business, buy a hotel stock, not one room in one building in one city dependent on that one location and whoever is currently managing the place. Sad.
RE : Special Buyers..
Yes there were a first tier of special “Friends and Family” discounts. Basically there were sales to inflate the sales so that Trump could get his loans. He later, or at least planned on, tore up those contracts so that he could sell them a the current price. There was a big stink about it in the papers a while back.
I wouldn’t pay a dime over $40K for that furniture.
I believe that the furniture price includes the appliance. Still crazy, but just a little less so.
Although I would never be interested in this type of “investment”, what if the buyer does not like the furniture? If they change the interior, do they get removed from the hotel rental program? Does this mean that hotel guests are coming back loudly down the hall outside your unit as they return from after convention cocktails?
@ Morgan–I don’t know the details about this project, but I have looked into other hotel condos, and they REQUIRE you to maintain the same furnishings as the rest of the hotel. It’s part of the terms of the hotel condo “operating agreement”, you agree to it as part of the sale. So you do not get a choice in the furnishings, colors, finishes, etc, and if the hotel decides to change things up, then it will be charged to you as a special assessment.
Again, I don’t know how this particular project works…I believe this project does not REQUIRE your hotel condo to be part of the rental program, so there may be more flexibility…but that was how the contracts for some other projects that I’ve seen were written up.
Trump or whomever is on the hook for this Development Jumped-The-Shark on this one.
I give it 1-2 years and people will be selling and really taking a haircut.