Who owns Condotels

Question

Looking for some peoples experience with Condos that were converted to hotels. Lending seems more strict, like more down, higher rates, etc. A lot have managements teams in place, which seems like hotel staff still

K S. · Answer

I tried to edit it after review but it timed out, sorry. Nothing personal, It was just my advice that in general, people need to protect themselves with actual data.

Bill B. · Answer

I didn’t see the upside. The Vegas one I looked had a 2 week per year personal use limit. It’s like buying a business where you don’t control any of the costs or the income.

Myrtle Mike Thompson · Answer

@Bobby Paquette I've helped many many clients purchase condotels in the Myrtle Beach market.  The vast majority DO allow you to self-manage or use a third-party property manager... my guys charge 15-20%.  Some will restrict access to commercial facilities onsite, such as a gift shop, fitness center, or tiki bar, but the pools, lazy rivers, and hot tubs (what most guests care about) are still freely available.  My local lending partners have been financing condotels here for decades and offer in-house portfolio loans.  One is often able to lend with 20% down but most will require 25%.  I also have a lender who can finance condotels through a commercial loan product with 20% down and her current rate on a 7-year ARM amortized over 25 years is 6.5%... not bad!  She can also close under an LLC name.  Let me know if I can help with any questions.  Positive cash flow is getting harder to find with the 2 and 3-bedroom units, but there's still a handful of buildings where a studio or 1-bed unit makes sense.

Bobby Paquette · Answer

I am in Charleston, so I looked at M.B first as well. one of my friends who is a lender, owns there but he paid cash for the unit. We spoke about all those numbers and to finance it doesn't make too much sense for the most part at a certain price point in my opinion

Doug Smith · Answer

That's pretty much what it is...a condo that acts like it's a hotel. The individual units are owned just like a condo, but there are very strong deed restrictions that come along with it that might limit your personal use and require you to put it into the "rental pool". A condotel will usually have on-site management that will often have a front desk like a condo for people to check in. The management company will get a cut of the action. Many if not most borrowers will think the place is a boutique hotel. We have a lot of them here where I'm at in Florida...particularly around the beaches and theme parks. Regarding financing, they are much harder to finance. Since use is restricted, they are considered "special use" and you'll need a non-QM lender that will allow condotels. They loan-to-value will tend to be lower and the rate will tend to be higher. We do it, but programs for this type of loan are limited. Does that answer your question?

Carlos Ptriawan · Answer

wow this is so cheap for condotel , mine 30YFRM was low 7 5YPPP and that's year ago rate. Who can offer lower from conventional from non-QM lender?

K S. · Answer

@Zach Edelman I would have loved to finance these condotels when rates were <3% as that would be free money since returns were ~6% but now rates are probably over 8% for investor loans killing any return you could get unless you put 50% down payment just to break even.

Zach Edelman · Answer

Let me know if you have any questions on condotels as it relates to financing! Happy to help.

Myrtle Mike Thompson · Answer

@K S. I appreciate the vote of confidence!  Same statement could have been made without using my name, lol.

Bobby Paquette · Answer

Yupp, that would be my plan if I purchase anything. I am only about 2 hours from Myrtle too !

Who owns Condotels

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