Buying a unit in an existing “condotel”

[Jon Mason]

We’re considering buying a unit in an existing building that is considered a “condotel”, in that there is on-site management. You’re not required to use the on-site company and we probably wouldn’t. Also, we’d be buying this as a second home without the expectation of making huge money off of it. If we break even I’d be happy.

We have a tentative accepted offer but the seller is concerned that we may not be able to get financing because of the “condotel” thing. Honestly, I hadn’t heard the word condotel until 5 minutes ago, so now I’m sort of concerned that we don’t know enough about this to move forward.

Will we have a difficult time finding financing? And are the down payment requirements different for these? Any other concerns we should be aware of prior to buying one of these units?

[Lauren Kormylo]

If a condo is non-warrantable, you will have trouble financing it.  Not only will you have trouble, but when you go to sell it, the next person will too.  

From https://themortgagereports.com...

"Common non-warrantable properties include condotels, timeshares,

fractional ownership properties, multi-unit condos (the condo unit

itself is two units), condos in a permanent care/assistance residence,

and other projects which require owners to join an organization, such as

a golf club...A condo in monetary litigation will likely be disqualified from financing by the major agencies."