Why not the Cosmopolitan Las Vegas High Rise Condo Hotel?

After a recent post regarding the cancellation of the Las Ramblas high rise condo project, a reader left the following comment:

I've been following the high rise market in vegas and reading your blog for a little while now. One thing that I noticed is that you do mention most of the good projects being built currently but seem to always neglect the one that I'm most interested in, which is the Cosmopolitan. The Cosmo seems to be one of if not the best project going up presently. Why is it that it's always left out when you mention other good projects around town?"

You wouldn't believe how many emails I get asking the same question - only the project name differs. Well, here's the answer: I try to write this blog with the emphasis on the small to average investor and/or condo unit purchaser. I try to highlight the projects with the least amount of risk where the financials work on a monthly basis... in other words, developments that a normal everyday Joe, like myself, would feel safe getting into.

Now there's nothing wrong with the Cosmo. It's a great project. They have their funding in place, and from the looks of things, it's definitely going to be built. However, if you're looking to purchase into the Cosmopolitan from a condo-hotel perspective (and why else would you? Otherwise you'd be looking at Turnberry instead), it may not be the best option for the small investor who needs to see positive cash flow on a monthly basis.

Quoting industry expert John Restrepo, "brand names have the best chance at success in this market". Trump's condo hotel will work because everyone knows the Trump brand. People in Montana know who Donald Trump is and when they visit Las Vegas, it's not far-fetched to think they may want to stay at Trump International. MGM Grand has a strong brand as well. Their convention traffic alone should translate into solid monthly rentals for the Residences Condo Hotel units. When the "W Residences" look to rent their condo hotel units, they can draw from the millions of names on their Edgewood Resorts database to fill their units.

Who knows the Cosmo? What's their brand? How are they going to market their units to the very same people who already know Trump, MGM, and the "W"? I know there were talks about the Grand Hyatt getting involved with this project, and if that's the case, that's a big plus to make the Cosmo a slam dunk project.

My only issue with this project is that COMPARED TO THE CONDO-HOTEL ALTERNATIVES available right now in Las Vegas, in my opinion, the Cosmopolitan has the least likely chance of consistently renting out units to provide condotel owners with montly positive cash flow - especially since the price points are nearly identical and all have similar amazing amenities and floorplans.

And that's the only reason the Cosmo project isn't mentioned more often in this blog. If positive cash flow is not a concern right now and you have the money to look solely at an appreciation-type investment play, then I think the Cosmopolitan works. But the average investor definitely needs to do their homework to see if this (or any) condo hotel project works for them.

I could be way off here, I'm willing to admit. I would love to get everyone's thoughts on whether any of this makes sense.