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Condotel Financing

Condotel Financing

Condotel financing can be challenging. Condotel units are a relatively new investment property vehicle being offered in vacation and resort areas. A Condotel is typically set up as a condominium with a lobby area containing a rental desk. Condotel units typically do not have kitchens. Owners may use the Condotel when they wish and make their Condotel available for weekly rental through a Condotel rental pool. A Condotel may be a viable alternative to the more traditional approach of buying a condo at the beach as a second home and then placing the unit into a rental program run by a property management company. In many areas of the country, these management fees can run from 25 to 30% of your rental income. Some of the Condotels I have looked at appear to offer a less expensive alternative to the management fees but, as always, you need to do your due diligence to be sure. From a Condotel financing perspective, a Condotel will require a larger down payment than a more traditional condominium. A Condotel used as second or vacation homes can generally be financed with a 10% down payment and mortgage insurance can be avoided with a combination condotel financing strategy. Although at slightly higher rates, I do have several lenders who will make available 95% financing. Please email me with any questions about condotel financing

Unfortunately, many mortgage lenders have not yet caught on to this rapidly growing segment of the market. As a mortgage broker, I have access to nearly 700 lenders and some fairly sophisticated lender search tools. Of the 700 lenders, only 14 returned any loan programs which allow Condotel financing. Most require fully documented income with 25-30% down payments with no secondary financing permitted. However, one of my favorite lenders will permit up to 80% financing on a full doc loan and up to 75% financing on a stated income mortgage loan or No Ratio mortgage. This lender will permit interest only mortgage financing which may significantly reduce your monthly costs. 

Common guidelines include:

Minimum loan amount is $200,000.
Participation in a rental pool must be voluntary.
Income from second home rentals used for qualifying purposes will be considered on a case by case basis if a 2 year history is available.
Commercial space is limited to a maximum of 20% of the project.
New Condo projects or conversions must meet a pre-sale requirement of 70% sold and or/closed. 60% must be either owner occupied or second homes.
HOA may still be under the control of the builder/developer.
There is no height restriction or number of units restriction.
Projects with Timeshare units are not eligible.

Max Loan Amount                 Full Doc                                     Stated Income/No Ratio

$500,000                                80%                                            75%
$650,000                                75%                                            70%
$1,000,000                             70%                                            65%

Read more about Condotel Financing Closing Costs

If you are looking at one and would like to explore some options, please give me a call or send me an email with as much detail as possible

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

Condominium FinancingPrequalify for your Condotel Financing.
 

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