Condotel Financing: Buying in a Building With a Front Desk
If the building has a rental program and a lobby desk, conventional financing is off the table. That does not mean cash only.
Buyers looking at resort properties hear the same thing repeatedly: this building is a condotel, you will need to pay cash. It is half true. Conventional financing is unavailable. Financing is not.
What makes a building a condotel
A front desk or check-in area, daily or weekly housekeeping, a central reservation system, mandatory participation in a rental program, revenue sharing with a management company, or a name that includes a hotel brand. Many buildings have one or two of these features without being marketed as hotels at all.
How condotel lenders underwrite
They look at the operator's track record, the unit's rental history, the association's financial health, and your credit and reserves. On investment purchases many will qualify the unit on its own income using a DSCR calculation against actual operating statements rather than long-term market rent.
Typical terms
Twenty-five to thirty-five percent down, 30-year fixed or ARM terms, and reserve requirements of six to twelve months. Small studios and units without a full kitchen narrow the lender list but rarely eliminate it.
Diligence that matters
Ask for two years of unit-level income and expense statements, the management agreement, and the association budget. Understand the split with the operator and what happens if you want to use the unit yourself. Those documents determine both your return and, in a DSCR file, your approval.
Does this apply to your situation?
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