By Jessica Johnson
Contributing Writer

Another hotel on the Isle of Palms is for sale, room-by-room. The Palms, operated by Holiday Inn Express, went condo-hotel this year. It’s one of two hotels on the Isle of Palms beach. The Seaside Inn next door is also a condo-hotel.

The majority of the Palms’ rooms with a private ocean view sold before The Palms Hotel publicly announced the offer.

However, people who have about $80,000 to put down and want a piece of the beach may have time to lock in an ocean front room at $399,000.

Partial- and non-view rooms are also available for $250,000.

“It’s a good long-term investment that you can use,” said Elliot Hutson, a broker associate with Prudential Carolina.

Condo-hotels, also known as condotels, are standard hotel rooms that sell as condominiums and have caught fire in major tourist destinations, but it’s a relatively new trend in the Charleston area.

“It’s such a great concept across the country,” Hutson said.

In typical arrangements, the buyer would be able to use the room 28 days out of the year and earn a share of the revenues when customers book their room.

The 68 units—ranging from 375 to 420 square feet—are being marketed to people who want to avoid paying taxes on investment property through a 1031 tax deferred exchange, Hutson said. The 1031 exchange is used when investment property is sold for a profit and the seller wants to avoid paying taxes on revenues.

Though the 5-year-old hotel went under new ownership, the Holiday Inn Express asked to continue to manage the rooms and keep its name. Huston said the corporation made the request because the Holiday Inn on Isle of Palms is the most profitable Holiday Inn located in both South and North Carolina.

Isle of Palms was once a place of seasonal tourism, but now it is common to see people out on the beach island year-round, Hutson said.

Those who want to buy a condotel would need to put down about 20% of the unit’s cost in order for room revenues to cover the cost of mortgage payments. The Palms Hotel estimated the average annual return on the investment to come in around 15%, while a comparable investment in stock may bring an 11% return.

“When you look at the cash flow, today’s low interest rates and the appreciation of oceanfront property, it becomes hard to say no to this opportunity,” Chuck Shaw, a partner in the project, said in a prepared statement.

Revenues from the rooms would be shared on a 38% to 62% split with the larger portion going to the owners. Net annual income for the ocean front rooms is estimated at $14,748 to $20,168. Estimated net annual income for the partial view and the non-view rooms range from $8,821 to $13,975, and $6,618 to $13,995, respectively.

“It enables the common person to get something on the front beach, and it’s subsidized for the most part,” Hutson said.

More information is available at www.ThePalmsHotel.us.

SUBSCRIBE | REPRINTS | CONTACT US

Phone: 843-849-3100    Fax: 843-849-3122