Back in 2008, I toured the then new Mondrian Hotel Residences in Miami. At the time, the condo units were starting at around $700 per square foot. They came furnished (design by Marcel Wanders). And you had the option of putting it in the hotel pool so that you could earn revenue on it when you weren't using it. I can't remember what sort of ROI was being quoted at the time.

After reading this WSJ article today on fractional second home ownership, I decided to pull some listings in the Mondrian to see how values have fared over the last 11 years (even though the business models are different). Here is one: a 694 square foot 1 bedroom on the market for $295,000 (or about $425 psf). The HOA fee is $1,260 per month and, according to Zillow, the last recorded sale was on September 25, 2007. It sold for $630,400 (or about $908 psf).

Most people probably like the idea of owning a second home that makes money when they're not using it and that requires absolutely no work or effort. But frankly, I have yet to come across a highly successful condo-hotel project (where the units come and go from a hotel pool) and I have yet to see any data supporting fractional ownership (or private residence clubs) as a solid long-term investment.

If you disagree, feel free to prove me wrong in the comment section below.