Getting a Big Return on Investment from Canmore Condo-hotels

When it comes to real estate investing in the mountains, few towns offer the same opportunities as the real estate in beautiful Canmore, Alberta.  A unique combination of factors contribute to the this town's overall viability as a real estate investor's dream, and property owners have been enjoying handsome returns on their investments for years. 

Nestled just inside the doorway to Canada's majestic Rocky Mountains, Canmore is a quick 1 hour scoot from the Calgary International Airport. This makes getting to your mountain retreat a breeze!  This town's proximity to Calgary comes with another perk as well:  Its relentless entrepreneurial spirit.  Cashing in on opportunity while you can is the name of the game in Canmore.  New developments are released, decisions are made and stuff gets done... And it gets done right. 

One of these opportunities come in the form of condo-hotels (also referred to as "condotels", "hotel-condos", or "contels"), and unique form of real estate investment that blends the independence & convenience of a condo with the luxury and full service of a high-end hotel. These condotels allow someone to own a full-service vacation home that owners can, when not using their condo, leverage the marketing and management to be done by a hotel chain. This hotel then rents and manages the condo unit as it would any other hotel room.

lady relaxing by condotel-esque pool with Canmore mountains in background

Canmore's Condotel of Choice: The Solara Resort & Spa

The much anticipated construction of the Solara Resort & Spa brought a new level of luxury and refinement to the Canmore hotel-condo market and investors did not waste any time purchasing their vacation homes.  Until recently, however, Solara property owners had no choice but to participate in the hotel's rental pool program – a program that boasts full occupancy during the peak season.  

Yet this mandatory rental program was problematic for some, and homeowners sought to have the condo bylaws changed to allow for self-management.  This change was embraced by the complex and homeowners' application to dispose of the "mandatory" rental program was successful. Property owners rejoice!


Why do hotel-condo rental pools matter? 

In-house rental pool programs serve an excellent purpose: They have a one-stop, all-inclusive property management company right at the front desk. This includes incorporating a professional website, extensive marketing, exterior signage, in-house maintenance/housekeeping, travel promotions, etc... When you think about it, what more could the discerning vacation property owner hope for?  Only 1 answer comes to mind – more income

I am a huge fan of in-house rental pool programs for their sheer reliability and ease-of-use that provides a truly "turnkey" experience.  The challenge, however, is that there are a large pool of buyers and real estate investors who would prefer to take on those property management tasks themselves in return for higher revenue.  With a 2-bedroom suite renting for approximately $500-$600 per night during the summer months, and vacancy rates at an all-time low, it is easy to see how the additional income could add up quickly. 

There is a small catch (wherein lies the money-making opportunity): To remove your Solara vacation property from the company-run rental pool, you must provide 18 months notice. Though while this practice is nothing new, the 18 month notice bylaw is one of the longest terms in the industry and serves to ensure the financial stability of the condo corporation as homeowners remove their units (and essentially that income) from the complex.


So Where is the Big ROI?

Properties that are not part of a mandatory rental program are perceived to be much more valuable than those that are, and as such there is higher demand for them. Basic economic principles state that an increase in demand, while supply stays fixed, will result in an increase in price. And while we have yet to see how this will impact the value of Solara condos, I expect the returns to be phenomenal. 

In general, real estate in Canmore increases at a rate of 5.5% per annum across the board per year.  Using this interest rate, a Solara recreational property purchased today at $400,000 (for example) could be worth $431,550 in a year and a half.

In other words, real estate investors would potentially see a $31,550 return over the relatively short period of only 18 months!

Savvy investors will recognize that by purchasing the same $400,000 condo now and removing it from the mandatory rental pool program, waiting out the 18 month grace period, and then listing their unit for sale will benefit from much higher gains. 

Peaked your interest? Want to learn more about Canmore condos and potential condotel investments in this truly 1-of-a-kind location? Then contact the team at Canmore.net online or call (587) 579-9500 to find out if this is really the right move for you and how to go forward. Ben's years of experience and expert knowledge of the Canmore real estate market will put you on the right path to finding the perfect Canmore home for your needs. 

 

 

Posted by Ben Maize on
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