From Boston to Los Angeles, developers are busy converting existing hotels to one of the hottest concepts in the lodging and real estate industries today-condominium hotels. These properties typically include mixed uses such as retail, office and even residential units. Why have they become so hot? For starters, the developer is able to pre-sell units and offset the front end costs. This also enables developers to get a higher sales price per square foot which flows back into the cash flow "pot". There are other upsides as well including the positive view from the lender's perspective. Sold units are a much more attractive way to lend and enable to developer to bring less equity to the table. Prestigous brands like Marriott's Ritz-Carlton, Starwoods St. Regis, Hilton and Hyatt are turning up the heat on this already this already hot segment. Buyers are willing to ante up more money for a branded luxury condominium than a similar condo in another building.

"The brand is important because people are buying into a lifestyle, and the brand is an extension of that lifestyle," said Mark Ellert, a partner at Langford Development, LLC.

Here is a short outline of a condo-hotel model. The hotel operator rents units just like a regular hotel. The revenue generated is split (sometimes 50/50) between the owners and the developer. The developer continues to own the common spaces such as restaurants, pools, retail spaces, etc. While these condos may be more expensive than traditional condos there are reasons for this. Buyers don't have to worry about maintenance and they have the opportunity to recoup some of their costs through hotel rentals. The full version of this article was published by Robyn Parets with the National Real Estate Investor.